Budget Speech Councillor Geoffrey Makhubo

THE BUDGET SPEECH BY THE MEMBER OF THE MAYORAL COMMITTEE FOR FINANCE IN THE CITY OF JOHANNESBURG, COUNCILLOR GEOFFREY MAKHUBO, COUNCIL CHAMBER, METRO CENTRE, BRAAMFONTEIN – JOHANNESBURG, 22

22 MAY 2014

INTRODUCTION

Madam Speaker, distinguished guests, councillors, residents of Johannesburg.

On this Budget Day we have the great pleasure to welcome so many distinguished guests, who honour us with their presence.

Madam Speaker, I want to acknowledge you, the Executive Mayor of our City; our distinguished Chief Whip of Council; Councillor, Prema Naidoo; the Members of the Mayoral Committee; the Chairpersons of Section 79 Committees who scrutinise the way in which we meet the commitments contained in this Budget and hold the executive accountable; the leaders and members of all political parties, representing wards and communities across our city; the City Manager, Mr. Trevor Fowler and officials of our administration; our partners and stakeholders in business, labour and civil society, the members of the media and all distinguished guests. I also welcome and acknowledge all those at various viewing venues across the City, those following on radio and TV broadcasts and the residents of Johannesburg at large. We thank you for your continuing interest and express our appreciation for the contribution you have made during the finalisation of our Integrated Development Plan (IDP).

I would like to present this Budget Speech under the Theme: “Corridors of Freedom”.

The vision is in place. The Mayor has set out the blueprint. Our duty is to continue with the construction. Our task is to build the bridge to the future. The budget of the City is the bricks and mortar that we will use to build this bridge that will take us to the Corridors of Freedom to our heart’s desire.

We are emboldened by the fact that many of you are joint architects and designers of this important and critical Bridge. I have no doubt that as we gather in this chamber, as well as many who are at different places watching and listening to this address, are resolved to make significant inputs and contributions during the construction phase of this important Bridge to the Future. Hopefully, many men and women, many young and not so young people in our beautiful city and countless residents from different stations in life, will join hands with us as we sweat to ensure that the Bridge becomes a reality.

The theme that I have mentioned is consistent with prescriptions given to us 21 years ago, when, as part of the necessary preparations for transition from apartheid to democracy, the ANC produced the document, Ready To Govern. Among some of its seminal guidelines the document said: 1  2013 THEME: BUILDING CORRIDORS OF FREEDOM TO OUR HEARTS DESIRE 
“Local Government will play a crucial role in building democracy in a future South Africa; local government will bring government closer to the people and actively involve them in decision making and planning processes which affect them”.

The Ready to Govern document further said that local government must be developmental in character. Local government should actively promote the process of sustainable and participative community development.

What will a future Johannesburg look like? A vibrant, prosperous, modern city, which mobilises the collective strengths of its diverse population; but also a caring city with compassion for the needs and aspirations of its citizens and a shared responsibility to conserve our environment.

We are all painfully aware that we cannot change the past including how we lived under the ugly face of apartheid local government. But we can do something about this ugly thing that we have inherited. We can – and we have a historical obligation – to determine and construct a better life for ourselves, for our children and for our children’s children.

Accordingly, the City of Johannesburg has embarked on a pioneering process to change the shape of an urban environment that has evolved over a period of more than a century. We are making a decisive break with a past characterized by inequality, poverty, discrimination and the skewed allocation of resources and services.

Today, together, we are shaping a City after our heart’s desire. This is the City that is alive with the possibilities of the freedoms we seek.

Indeed, Madam Speaker the medium-term budget we present today is about giving effect to the fundamental rights expressed by the Executive Mayor in the State of the City Address. Let me remind you again of these rights:

  • The Right to Developmental Service Delivery;
  • The Right to a spatially integrated and united City;
  • The Right to a liveable city;
  • The Right to inclusive economic growth; and
  • The Right to remake ourselves.

It is therefore my honour to present to you today the Medium Term budget for 2013- 2016 for this great City. This is the third budget of this term of office, under the overall theme “Building a Sustainable, Resilient and Responsive Local Government”. As we present a record Budget for the City today we are confident that this will have a profound impact on our ability to transform Johannesburg.

Madam Speaker,

The Corridors of Freedom present the City with a unique opportunity to reshape its urban form and construct a future based on equity, accessibility and sound economic principles. It is within our grasp to leave a lasting legacy for future generations based on our hearts’ desire.
Today’s Budget is, thus, the start of a long-term programme of action. Although the facts and the figures speak to the immediate future — the next three years — we should not lose sight of the fact that our current planning and expenditure will have a lasting impact on the City’s form and activities decades down the line. The budget I am presenting today takes the first steps towards our target of spending in excess of R100billion on infrastructure over a period of ten years. In the words of the American educator and economist, Peter Drucker: “Long range planning does not deal with future decisions; but with the future of present decisions.”

MACROECONOMIC CONTEXT

Madam Speaker, in considering our long term aspirations, it is important to consider the macroeconomic context as Johannesburg is a key contributor to the economy of not only Gauteng, but of the entire South Africa. The world economy is in its sixth year of crisis. While there are signs of improvement the outlook remains troubled. Growth is still muted in most countries and much of Europe is still experiencing recession. Even economies such as China are slowing down. Africa is a bright spot in the world economy, with economic growth in Sub-Saharan Africa projected to be 5% in 2013. South Africa is now the single largest investor into the African continent, with much of that investment being driven by firms or finance houses based here in Johannesburg. Similarly, South Africa’s membership of the BRICS (Brazil, Russia, India, China and South Africa) grouping provides the city with opportunities far beyond our borders, opportunities to grow our city’s economy faster and in more inclusive ways.

On average, annual growth of the South African economy declined from 3.5% in 2011 to 2.5% in 2012. Economic growth of 2.7% is projected for 2013. Gauteng makes up 34% of the national economy with Johannesburg contributing 48% to the Gauteng economy. This implies that a growth in the economy of Johannesburg will significantly affect the national and provincial economies. On average, Johannesburg grew at an average rate of 4.2% between 1996 and 2011, which is higher than the average growth of the national and provincial economies at 3.3% and 3.7% respectively.

Despite the improvements that are emerging in the economy, households are still faced with increasing financial pressures. A recent study done by the Human Sciences Research Council on the Economy of Johannesburg indicates that the level of household Disposable Personal Income for residents of Johannesburg is low and most spend more on food, public transport, clothing and fuel than they earn. This implies that households are financing their spending out of sources other than their disposable income. This is an indication of how indebted households are and has implications on their ability to pay for municipal services.

Madam Speaker, we acknowledge that the economic context within which we table this budget is challenging. However the challenges are not insurmountable if we commit to working together to build the communities we desire.
STATE OF FINANCES

Madam Speaker, financial sustainability and resilience are foundations that support the short and long-term vision of the City as we build bridges from the present to the future. We are continuing to build a solid foundation that can withstand unforeseen external and internal shocks.

Our credit rating remains unchanged, at AA- (zaf) for Fitch, with a stable outlook and A1.za for Moodys, with a negative outlook based on concerns about sovereign contagion. These concerns by the rating agencies arise from the deteriorating economic conditions and weakening public finance. Other concerns are about the loss of competitiveness, extent of wage settlements above productivity as well as infrastructural constraints.

In the current year our finances continued to strengthen, bolstered by sound financial strategies and forward thinking by the city. To date, we have not used any external borrowings to meet our cash flow requirements further emphasising our financial strength. We owe this outcome to effective financial management and sound planning of our operations. There is a strong commitment to prudent financial management at all levels; ensuring tightened controls, strengthened policies and procedures and the attainment of a clean audit.

Four of the key ratios that measure prudent financial management have improved. These are solvency, debt to revenue, net operating margin and cash coverage. It is on the base of the surplus of R4.9 billion and cash equivalents of R2.2 billion achieved in 2012, that we are able to increase our capital budget by over 60% for the 2013/14 financial year. This is an investment in our future; the bridge towards the Corridors of Freedom.

Madam Speaker, much has been achieved; however much still needs to be addressed as we raise the bar going forward. Residual issues remain in the billing environment, even as we are working to deal with each of these issues. The secret of success, Fellow Councillors, is to treat all customers of the City as kings and queens. This is the attitude that we must and are inculcating in our staff members.

Between January and March 2013, we rolled out a regional campaign in our walk-in- centres with the intention of resolving non-technical queries; reducing customer waiting times; providing technical product knowledge; and promoting a culture of efficiency and professionalism.

Fellow Councillors, we are encouraged by compliments that we are getting from customers commenting on the improved service they are receiving in our walk-in- centres. To illustrate, let me quote from an e-mail sent by a customer, Nikki Dauben:

“I would like to bring to your attention the excellent service I received from Roodepoort offices (customer centre). I have been struggling for more than a year to have clearance paid out. This despite the fact that I have been liaising with Ria directly in this regard on numerous occasions. This week I called at the customer centre in Roodepoort and was assisted in a very professional manner by Brenda Ndlovu and her team. Today, only a few days later, I have already had positive feedback in this regard. Considering the fact that everyone is complaining about level of service from the City of Johannesburg, I am making a point thereof to say THANK YOU as the service I received from Brenda and her team has been excellent.”

Fellow councillors, this is the customer experience that we will see as the everyday experience throughout the city.

Madam Speaker, like many other organisations, the City has been negatively affected by the poor economic situation and the difficulties faced by many households in settling debt. This can be seen in the number of consumers who are registered for the Extended Social Package. We have heard the comments made in the IDP consultation process, and we have changed the structure of the electricity tariff to lower the impact of the increase so that it is more than comparable with all other metros in the country.

Going forward we are implementing changes in the credit control environment, to effect collection processes before the due date using telephone reminders to enable timely payment and increase the proportion of the customers’ base that are good payers.

In order to deliver on the ambitious capital budget programme, the City is committed to increase its financial capability. To achieve this we have developed a 15-point financial plan, over ten years that will focus on completeness of revenue; strategic supply chain management incorporating economic transformation; expenditure management that eliminates unnecessary expenditure through zero-based budgeting; and attainment of a clean audit.

Financial systems are being enhanced to support the capital investment plan, which includes investment in a capital information management system. In addition an Interim Programme Management Office has already been established in the Office of the City Manager with a view to creating a fully functioning permanent structure in the 2013/14 financial year. The Programme Management Office will implement a new approach to project selection and ensure that there is capacity to deliver on all projects and derive value for money for the City.

KEY PRIORITIES

Madam Speaker, in 2012/13, the City embarked on a process to unpack the outcomes of the Joburg 2040 Strategy into clear and specific outcomes for each of the three decades. This process clarified and agree the envisaged outcomes for the remainder of the current term of office.

This Medium Term Budget gives effect to desires expressed during participative IDP engagements conducted throughout the City. Ten priorities were confirmed during this consultation. Each of these priorities will influence the future shape and direction of the City of Johannesburg. Collectively their implementation will transform the City, the lives of its residents and enable Johannesburg to meet its destiny as the world- class African City of the future.

The 10 priorities are:

 Financial sustainability and resilience; 5

 Sustainable human settlements;

 Agriculture and food security;

 SMME and entrepreneurship development and support;

 Engaged Active citizenry;

 Resource resilience;

 Smart City;

 Investment attraction, retention and expansion;

 Green economy; and

 Safer City.

Madam Speaker, these priorities are articulated in the IDP programmes which provide the strategic base for budget allocations. The successful implementation of these programmes will ensure the realisation of the Corridors of Freedom.

Engaged Active Citizenry

The concept of engaged active citizenry advances a simple principle that every resident of the City is an important stakeholder and deserves to be heard and engaged with consistently on matters of public governance and service delivery. In return, every resident is expected to be an active and responsible participant in shaping the future of the City and the general well-being of society. It is also based on an understanding that when communities are organised and interact with the city in an organized manner, a partnership for development is possible. The Engaged Active Citizenry priority will ensure that the residents of Johannesburg take an active role in their communities. This priority is focused on the daily experience of residents as they interface with the municipality to ensure that service excellence becomes the norm.

Green Economy

To ensure a sustainable future the City requires a decisive and rapid shift towards investments that promote the responsible use of natural resources and the protection of the environment.

This will be achieved through the development of a green economy framework, the packaging of green projects to attract investments and the implementation of programmes that will stimulate demand and supply for green services and products.

These opportunities created by investments in green initiatives will not only ensure the long-term sustainability of Johannesburg, but also open up exciting new opportunities for communities to benefit from job creation.
Resource Sustainability

The demand for resources such as water, electricity and fuel are strongly related to the growth and development of the city. Human actions and activities are depleting the limited natural resources of Johannesburg. Thus the City needs to secure ecologically sustainable development by making use of natural resources while advancing socio-economic and human development as part of the Resource Sustainability Priority.

This will be done through initiatives that reduce bulk water demand, lower the electricity demand, and reduce the volume of waste generated in the City.

Through our approach of developmental service delivery, that is, utilising the capabilities of communities, 4 000 jobs opportunities will be created. An example of this is utilizing the existing entrepreneurial spirit of waste reclaimers and the young people in Soweto who collect and clean bins for residents. We encourage other communities to take up the challenge and ignite similar developmental service delivery initiatives.

Sustainable human settlements

Madam Speaker, the urban form of the City perpetuates our apartheid past, and continues to entrench inequality, poverty and unemployment. Accordingly, the interventions outlined under the Sustainable Human Settlement Priority seek to build the bridge between the rich and the poor, black and white, townships and suburbs.

The Corridors of Freedom will knit the urban form together through the mass transit of people and goods along corridors that strengthen the connectedness of different parts of the city. These corridors will be developed to support inclusive, high-density mixed-use developments to reduce commuting times and costs. These developments will also slow down the process of urban sprawl and the uncontrolled spread of low-density developments on the fringes of the City.

They will improve the walkability, accessibility and safety of our neighbourhoods as well as promote and support cycling and the use of non-motorised transport in the City. The benefits we will yield from investing in the Corridors of Freedom will be the reduced use of private cars, an increased reliance on an efficient public transport system such as Rea Vaya and opportunities for co-investment with the private sector. Investments in public infrastructure, specifically in mass public transportation systems, form the backbone of our intended series of spatial transformation interventions. By 2016, the Rea Vaya network will transport 200 000 passengers connecting the communities of Protea Glen, Eldorado Park and Dobsonville with the Joburg Inner City and beyond to Parktown and Alexandra.

This priority fundamentally addresses the right of all citizens to a spatially integrated and united City. Future corridors will be extended to Diepsloot and Ivory Park.

The Corridors will ensure a seamless transport network, which merges the different modes, provided by Rea Vaya, Metrobus, commuter rail and the Gautrain to provide Joburgers with the ability to work, live, and play within easy travelling distances.
The Sustainable Human Settlement Urbanisation Plan (SHSUP) and the Inner City Roadmap respond to rapid urbanisation, and address the current lack of affordable rental accommodation in the City.

The focus is to provide alternative rental stock that takes due consideration of the social and engineering infrastructure required to meet the increased pressure on these services.

Agriculture and Food Security

The Agriculture and Food Security programmes seek to break the intergenerational cycle of poverty. We will generate employment and sustainable livelihoods which are critical to food security. The focus will include actively supporting and providing incentives for small-scale growers to provide a steady support of fresh produce from the urban food system and improved access to markets.

The City is facilitating agribusiness ventures and farm enterprises for the growing urban population and provide viable food procurement and distribution systems. We will work with large food retailers, distributors and manufactures to create a localized system to ensure food security.

SMME and Entrepreneurial Support

Unemployment, particularly youth unemployment continues to be a challenge in Johannesburg and is aggravated by the global economic meltdown. Massive job losses have a negative impact on the City’s residents and their ability to pay for services. In the current term of office, we will provide SMMEs and entrepreneurs in Johannesburg with improved access to support and development services, and improved access to opportunities. The City of Johannesburg is one of the largest players in the economy of South Africa, with a significant economic footprint and substantial regulatory and administrative powers, and stakeholder relationships. These all have significant economic implications and the City is therefore well placed to drive the transformation of Johannesburg into an SMME-centric city.

Investment attraction, retention and expansion

A survey by Mercer, the Swiss Bank UBS, the ECA International and the Intelligence Unit (EIU) of the most expensive cities of the world ranks City of Joburg at number 154 of 209 cities making it a relative least expensive city out of those surveyed. The City will continue to build on its comparative advantages through fostering a business friendly environment, by ensuring competitive tariffs, efficient transport networks and reducing non-monetary costs such as traffic congestion. The accelerated delivery of modern, quality socio-economic infrastructure will significantly improve Johannesburg’s capacity to attract investment, trade and tourism. The City is already a world-class business destination of choice and dedicated strategies will be introduced to strengthen and expand its unique advantages.
Safer City

The City is committed to create a safe, secure and resilient environment in which communities can grow and prosper. Stepped-up law enforcement must be supported by broader efforts to combat the impact of urban grime, community support for by- laws, improved urban design and the greater utilisation of smart technology.

The Joburg 10 Plus initiative launched in 2012 brings Metro Police Officers closer to communities, but also to mobilise community involvement in their own safety through their participation in ward committees and Community Policing Forums.

Smart City

The future of Johannesburg will be enhanced by its ability to mobilise modern technology in a manner, which attracts investments, encourages business growth, improve access to services for all residents and improve the quality of life of communities. The Johannesburg Broadband Network is already well underway to reduce the cost of doing business in the City and to broaden access to economic opportunities for residents. An integrated intelligence centre will provide a much-needed high-tech tool for crime prevention. Other technological interventions include smart metering, which will, increasingly, place the power in the hands of residents to manage their own consumption of City services.

THE 2013-2014 MEDIUM TERM BUDGET

Madam Speaker, the 2013/14 Medium Term Budget provides us with an important bridge to link us to the future through our decisions on the allocation of resources. In this period we continue to focus on ensuring financial sustainability while delivering on the programmes outlined in the Integrated Development Plan (IDP) and Growth and Development Strategy 2040 (GDS). It reaffirms our commitment towards the prudent management of the City’s finances. To maintain financial sustainability the City has a set of parameters within which financial planning should be aligned and this will require generation of an annual operating surplus, prudent borrowing, creating cash reserve to increase the level of infrastructure spending and reviewing activities for operational efficiencies.

The 2013/14 Budget is premised on changing course by doing more with less; addressing the culture of abundance; increasing productivity and managing human resources effectively; an inter- cluster approach to ensure coordination of programmes; customer centricity; and stabilising the revenue base of the City.

BUDGET ALLOCATIONS

Madam Speaker, Councillors, residents of Johannesburg

I am proud to present today a Budget for 2013/2014 that, for the first time in the City’s history, exceeds R40 billion. This consists of an operational budget of R36.3 9
billion while R7.5 billion is allocated towards capital expenditure. Approximately R4.6 billion of the capital budget, will be funded by the City and R3 billion from grants and public contributions.

Ladies and Gentlemen, today, Johannesburg is the first municipality in South Africa to take the unprecedented step of tabling a multi year capital budget of R30.1 billion to Council for approval. From a current average of 39% self-funding, we will grow to above 65% funding by the City.

The operating budget that I am tabling refers to the 2013/14 financial year while the capital budget is for the three year period up to 2016. In other words the operating budget is appropriated for one year and the capital budget is appropriated for three years in terms of the Municipal Finance Management Act (MFMA).

The reorganisation of Mayoral Committee portfolios and responsibilities using a cluster approach will ensure strengthened levels of coordination and cooperation between departments resulting in better service delivery.

SUSTAINABLE SERVICES CLUSTER

Madam Speaker, the Sustainable Services Cluster oversees and coordinates the bulk of the City’s service delivery obligations. R21.9 billion, which is more than half of the total operating budget of the City, is allocated to this cluster for the 2013/14 financial year.

This Cluster is also taking the lead in the planning and implementation of the City’s Corridors of Freedom through the construction of transport arteries and mixed-use nodes surrounded by high-density residential accommodation. The capital budget for the cluster amounts to R17.3 billion for the next three years.

The operating budget of Environment and Infrastructure amounts to R136.6 million. The budget addresses issues of protection of critical biodiversity areas; the reduction of domestic waste disposed to landfill, waste minimisation and alternative waste treatment technology; and the reduction of pollution levels in water courses, water quality monitoring, reclamation of water-courses and river health.

The remainder includes a once-off allocation for Johannesburg’s hosting of the 5th Global Summit on Climate Change that will be attended by Mayors, business leaders, academics and civil society activists from the world’s 59 largest cities.

This is a unique occasion for Johannesburg to contribute to the activities of the C40 group and to ensure that issues related to Africa and the global South feature prominently in the discussions about climate change and the movement to low- carbon economies.

The capital budget of R74.9million includes a significant allocation for the on-going project to rehabilitate Bruma Lake.
Development Planning

department receives a capital budget of R1.7 billion which includes R250 million for the coordination of the Transit-oriented development project and mass public transit corridors as well as the managed growth of the inner city. Also included in the capital budget is the widening of roads, sewer upgrades and the rehabilitation of storm water infrastructure and precinct developments in Alexandra Renewal Programme, Orlando Ekhaya, Diepsloot and Ivory Park. The Department of Housing receives an operating budget of R634.1 million and capital budget of R2.4 billion.

The capital budget will focus on facilitating housing opportunities to households on the 1996/97 waiting list; accelerating the upgrade of informal settlements; facilitating affordable rental accommodation; continuing the Hostels upgrading programme; and providing mixed income housing opportunities. New developments including bulk infrastructure will take place in areas such as Bramfischerville, Devland, Riverlea, Matholesville, Kliptown, Lufhereng, Drieziek and Lehae amongst others. Developing the Corridors of Freedom will include housing opportunities provided by the City’s department of Housing. However we will engage with national and provincial government to enable a funding mix, which shifts from exclusive RDP housing to rental and mixed-use housing. The impact of this will be higher density and a more efficient and liveable city. By 2016, for example in the precinct of the Walter Sisulu Square of Dedication, we will have the type of development we are describing.

City Power

receives an operating allocation of R13.2 billion and capital budget amounting to R6.8 billion. Capital investment will focus on improvement of the quality of supply and quality of service with the key projects being the continuing roll out of the pre-paid system; introduction of smart meters; the upgrading of the electrical network in various areas and substations such as, Wilro Park, Fleurhof, Lehae and Cydna. We are also investing in the Sebenza new bulk intake point. We are investing in infrastructure upgrade to reduce technical and non-technical losses in electricity. The reduction of electricity losses will assist in the creation of additional reserves that can be directed to future capital investment.

The budget for Joburg Water consists of operating budget of R5.9 billion and R3.7 billion for capital projects with projects in Orange Farm, Doornkop West, Protea Glen, Roodepoort, Diepsloot, Sandton, Alexandra and Bramfischerville amongst others. We will continue with maintenance to the network to reduce the losses to 22% by 2016 from the current 30%, and strengthen our ability to respond timeously to leaks and disruptions of services. Urban water management system and demand-side management initiatives will be implemented such as pressure management, pipe replacement and leakage control, and retrofitting and removal of wasteful devices.
Pikitup’s

allocation of about R1.6 billion operating budget will focus on continuing with the round collection of refuse; street and Inner City cleaning; separate at source; the cleaning of informal settlements and addressing illegal dumping. The capital budget of R526.5million will finance new depots in Haylon Hill and Orange Farm, while funds will also be made available for the upgrading and maintenance of landfill sites and underground waste receptacles for the Inner City and at high pedestrian volume areas such as taxi ranks. The

Johannesburg Social Housing Company (Joshco)

receives operating funds of R121.8 million and a capital budget of R1.8 billion. Among Joshco’s key current projects are the City Deep Mixed Housing Development; Fleurhof Junction Social Housing; Europa House Renewal Housing Development; Orlando Ekhaya staff hostel; the Selby staff hostel redevelopment, the Selkirk Social Housing project in Blairgowrie and the provision of affordable rental housing in the Inner City. These programmes will deliver over 1 700 affordable rental units over the medium term. The Johannesburg Development Agency plays a key role in the planning and implementation of the developments in the Corridors of Freedom. Its budget consists of R59.5 million for operational expenses and R412.5 million for capital projects including projects such as the Nancefield, Jabulani and Orlando East station precincts and the Kliptown Precinct Development.

HUMAN AND SOCIAL DEVELOPMENT CLUSTER

Madam Speaker, the Human and Social Development cluster has been allocated R4.8 billion for operating expenditure and a capital budget of R1.4 billion over three years. Community Development receives a R331.2 million for capital projects in the medium term, which include upgrade of community facilities such as recreation centres, swimming pools, libraries and sports grounds. These projects include renewal of Jabavu, Moletsane, Newclare, East Bank and Riverlea swimming pools; the renewal of the community centre in Ennerdale, the Kwa-Bhekilanga sports ground renewal, the Davidsonville, Hillbrow and Lenasia South civic centres, the Westbury, Doornkop and Zakariya Park recreation centres, the Florida, Diepkloof, Yeoville and Ivory Park libraries and upgrades to Museum Africa and the Hector Pietersen Memorial. Health services receive an operating budget of R611.2 million to continue with the implementation of the City’s wide range of services such as a single window for services to the poor and vulnerable; improved access to primary health services; HIV/ AIDS, and tuberculosis treatment, care and support; maternal, child and youth health programmes and the Go Jozi campaign to promote active and healthy lifestyles and prevent chronic and preventable diseases.

In addition the City has embarked on a vigorous public awareness programme to promote healthy lifestyles and improve health outcomes through exercise and wise lifestyle choices. From the R162.1million allocated for capital programmes in the medium term we will upgrade the Ennerdale clinic; build the new Freedom Park clinic in Devland; upgrade the Mountain View clinic in Finetown; phase 2 of the Mpumelelo clinic in Ivory Park; and new clinics to serve the communities of River Park, Zandspruit and Slovoville. R145.2 million operating budget is allocated to the Social Development Department with a further R61.6 million towards capital projects. Programmes that will benefit from this allocation are aimed at youth development, support for indigent households through the extended social package; the integration of migrant communities, senior citizens, woman empowerment and agriculture and food security.

The capital programmes include the construction of the Golden Harvest drug and rehabilitation centre; the refurbishment of the Yelta Nethan Community Centre and shelters for displaced people. The operating Budget for Public Safety will grow by 5.1% to R2.3 billion with a capital budget allocation of R432.2million. The Emergency Management Services’ budget will focus on primary community- based emergency response education, fire prevention and the rollout of safe energy sources in high risk informal settlements. Focus is on crime prevention operations targeted at violent crime in particular and the continued roll out of the Joburg 10Plus strategy.

This initiative combines crime prevention, traffic management, By-Law enforcement and community outreach programmes within wards and neighbourhoods and the strengthening of the Anti- Fraud and corruption campaigns. City Parks and Zoo receives an operational budget of R693 million. The R373.9 million capital budget of City Parks and the Zoo will go towards projects such as new parks in Leratong, Poortjie, Orange Farm, Northern Farms-Diepsloot, Chiawelo and Road Islands; the development of the Olifantsvlei cemetery, and R10 million for the establishment of new parking facilities at the Zoo. The operating budget for Joburg City Theatres is R102 million. The main focus is entertainment and education programmes to build social cohesion and inclusivity. The capital budget of R28.5million will be used for renovations and upgrades at the Joburg Theatre, the Pro-Musica theatre and the new Soweto theatre.
ECONOMIC GROWTH CLUSTER

Madam Speaker the Economic Growth Cluster receives an operating budget of R3 billion and a capital budget of R9.1 billion. The R103.7 million operating budget allocated to the Department of Economic Development will go towards stimulating economic growth through targeting labour- absorbent activities as well as the promotion of innovation through “green economy” initiatives. It will also sustain the City’s commitment to address the issue of skills mismatch between supply and demand through the Skills Hub. The capital allocation of 148.6million includes EPWP grant, which will create job opportunities within the City. R44 million goes towards fibre optic infrastructure for the Broadband network; R18.6 million for the construction of linear markets and the construction of informal trading shelters at Alexandra Pan-Africa and Noord Street and R23.8 million for the Inner City Property Scheme. Transportation is allocated an operating budget of R1 billion and R3.1billion for capital expenditure. The capital budget will mainly go towards extending the Rea Vaya Bus Rapid Transit, into new areas. This project continues to be a catalyst for accessible, affordable and integrated public transport through the Corridors of Freedom. R29.5 million is also earmarked for cycling lanes and sidewalk improvements in Kaalfontein Ext 8, Ivory Park along the Midrand route, and the University of Johannesburg – Wits routes. The Joburg Market, the largest Fresh Produce Market in the world, receives an operating budget of R271.5 million to ensure it continues to meet its core mandate to ensure continuous and adequate supply of suitable quality fresh produce at reasonable prices and the establishment of fresh produce retail market facilities in marginalised areas. Various upgrading and refurbishment projects are included in its R613.2 million capital budget towards transforming the Joburg Market into the Market of the Future.

Johannesburg Roads Agency is allocated an operating budget of 736million and capital budget of R4.5billion. This massive capital budget will go mainly towards the resealing, resurfacing and renewal of roads throughout the city including roads in Bryanston, Sandton, Rivonia, Parkview, Eldorado Park and Riverlea. Projects will also include upgrade of the M1 and M2 Motorways, upgrades to the Le Roux Avenue Bridge and the Naledi / Protea Bridge. Other projects include traffic signal mobility management, gravel roads and the maintenance of roads, bridges and storm water infrastructure. 14
We will upgrade gravel roads in Bramfischerville, Diepsloot, Doornkop/Thulani, New Lawley, Orange Farm, Tshepisong and Ivory Park. Johannesburg Property Company receives operating budget of R401.7 million. Within the capital budget of R566.4 million are allocations for the Orlando Ekhaya Waterfront Development Renewal Park as well as for strategic land purchases, site development and preparations. Metrobus is allocated operating budget of R483.1 million. The R101.8 million capital budget will mainly go towards the purchase of new buses.

GOOD GOVERNANCE CLUSTER

The operating budget of R4.6 billion for 2013/14 and a capital budget of R2.4 billion are allocated for the Good Governance Cluster. Madam Speaker, the day-today experiences of service delivery of our residents remains a critical foundation in building this bridge to the future. In his State of the City Address, the Executive Mayor, assured our residents that their concerns over the quality and effectiveness of service delivery are not falling on deaf ears. Building on the success of the ninety day Accelerated Service Delivery Programme, we introduced an Integrated Visible Service Delivery Programme through Citizen Relations and Urban Management, to serve as our eyes and ears on service delivery breakdowns at ward level. This ensures that we deal with issues before they become a nuisance for our residents. Significant inroads already made to improve basic service delivery in the first 35 wards, will be extended to 70 wards in the new financial year. Madam Speaker you will also recall that we had initiated community-based planning and budgeting in Region E, which includes Alexandra and Marlboro. This gave us an opportunity to engage with residents, identify challenges and solutions through strategic partnerships with the residents and other stakeholders in the implementation of the solutions, as one of the building blocks towards developmental service delivery model. This successful initiative will be rolled out in all Regions in the new financial year. An allocation of R100 million in the operating and capital budgets, for the Office of the Executive Mayor has been made available. This will address service delivery breakdowns in the city through the Integrated Service Delivery Model for Region E as well as the 70 wards mentioned above. Given the new approach in the Integrated Service Delivery Model, the operating and capital allocations will be reviewed and considered effectively to allocate resources for the outer years. The Integrated Visible Service Delivery programme shall not be a lasting solution for efficient and quality services. Our new developmental service delivery model, however, promises an innovative and sustainable solution, where it is not just about the City providing services but rather an approach of “all hands on the deck”, with 15
communities at the centre of the process. This will allow us to capitalise on the resulting socio-economic opportunities. The Office of the Speaker is allocated R4 million in 2013/14 to conduct initial feasibility studies for building alterations to the Council Chamber. Future allocations over the remaining two years will be done on the basis of the outcome of the feasibility study. Group Finance receives R2.8 billion in its operating budget to meet its responsibilities in asset management, business and financial planning, valuation and the management of revenue, rates and valuations. The allocation of R34.7million includes investment in a capital management system. The allocation for Group Corporate and Shared Services includes R2.2 billion capital budget to be used for the ICT-infrastructure renewal and optimization, and the renewal and procurement of fleet vehicles. TARIFFS Madam Speaker, According to the South African Chamber of Commerce and Industry (SACCI), consumer confidence index slumped to a nine-year low in the first quarter of 2013. This is due to a slower economic growth, job losses and higher inflation, which curbed households’ finances. The level of consumer confidence has declined indicating lower faith in the economy as a result of increases in the cost of living, especially the cost of electricity, fuel and transport. The high levels of insolvencies are also an indication of how strained consumers are.

Madam Speaker, in determining the tariffs for the 2013/14 financial year we had to ensure that they are affordable yet at the same time contribute to the sustainability of service provision. In the current economic environment, households are faced with very real challenges with regards to disposable income and our tariffs need to respond to these pressures. The City takes decisions on new tariffs following a citywide consultation processes. The proposed new rates are published well in advance of the Budget speech and individuals, organisations and communities are invited to give their views on the increases.

Madam Speaker in line with the provisions of the Municipal Property Rates Act, we will be implementing a new General Valuation Roll on 1 July 2013. The new property values reflect the market conditions as at 1 July 2012 as well as other dynamics within the property market such as average selling prices within an area. The General Valuation Roll provides the base information on property values on which rates are determined. The General Valuation Roll was published through various media to ensure transparency in the process and allow objections to be lodged by anyone who has 16
an interest. 85 499 objections were received of which 73% were objections by the City of Johannesburg to either properties over valued or under valued. The tariffs for water and electricity are largely outside of the control of the City because they are determined by external agencies – Eskom and Rand Water.

The increases we announce thus reflect the decisions on pricing taken by these providers of bulk services as well as the National Energy Regulator of South Africa – NERSA. Madam Speaker, Johannesburg’s new tariff increases are designed to encourage residents to manage their consumption of power and water in a pro-active manner and, thus, benefit from lower than average increases. You will note that the average increase for electricity for 2013/14 is 7.32%. This is lower than the 8% Eskom increase approved by the National Energy Regulator (Nersa). Through the city’s stepped tariff structure for electricity services residents can, however, manage their own monthly bills. The principle is: the higher the consumption, the higher the cost per Kilowatt- hour (kWh). The monthly electricity bill for a household consuming 350 kWh will increase by only R17.49 to R252.33. This percentage increase gets higher as consumption patterns grow. Consumers of 500 kWh will see a R68.49 rise in their monthly bills. The City’s water bills reflect the same stepped tariff approach to encourage savings on a very scarce commodity. While all households receive the first 6 000 litres (6 kilolitres) of water per month free, those consuming between 6 000 and 10 000 litres will experience a modest increase of 5.3% — way below the average increase of 9.82%. The size of the new increases grows larger as water consumption patterns escalate. Those, consuming up to 20kl per month will pay 11.82% more and those households using more than 40kl will see a 12.82 % increase in their bills. Madam Speaker, I want to emphasize that consumers themselves can take steps within their own households to reduce their monthly bills. Information on practical measures to lower consumption is widely available from the City, from City Power, Joburg Water and Eskom. We can all contribute to the national efforts to conserve electricity by limiting our consumption during the peak hours between five in the afternoon and nine in the evening; by switching of the geyser and unplugging appliances which are not in use; through better insulation in our homes and through switching to energy-efficient light bulbs. One of the bridges to the future that the City is building is the introduction of technology and systems to enable residents, business and industry to control and manage their own water and power consumption. Over the next three years, City Power will continue with the roll-out of a R1.25 billion smart electricity meters initiative. These will, eventually replace the conventional 17
meters that are currently in use in households, businesses and industry across the City. These meters will not only empower consumers to manage their consumption but also significantly improve the quality of information upon which our billing system is based. Consumers will have exact details of consumption available at any time and we are convinced that greater confidence in the system will also lead to higher levels of payment. Madam Speaker, Councillors, The important features of the new tariffs that come into effect on 1 July 2013 are:

 Electricity tariffs increase at an average of 7.32 %

 The tariff for water, sewerage and sanitation increases at an average of 9.82%

 The tariff for waste removal will be increased by 10% for domestic consumers and 9% for businesses, which is reflective of real costs. Properties valued at less than R200 000 will continue to receive free refuse removal services.

 The rates tariff increases by 5.3% for property rates

 Rea Vaya BRT fares are increased by 16.5%; Metro bus fares by 5.3% for cash passengers and 7.0 for coupon holders Madam Speaker, More than 120 000 households in Johannesburg currently receive free water, electricity and waste removal services from the City in terms of our Expanded Social Package Policy.

The number of registered indigent households is expected to grow to 200 000 over the medium term. Madam Speaker our tariff structure includes far-reaching concessions to assist households in paying for essential services. Among these are:

 Electricity tariff increases have been limited to 7.3% in line with the NERSA recommendation for municipalities

 The first R200 000 of the value of all residential property are exempted from rates;

 Pensioner owners with a monthly income less than R6 000 are given a 100% rebate while those earning between R6 000 and R11 000 qualify for a 50% reduction. The 100% exemption is also given to pensioners over 70 years who live in a R2-million home.

 The ratio for tariffs for businesses in the City has been reduced to 3.0 from 3.5 and for agricultural residential property from 1 to 0.9. 18
 Organisations responsible for animal protection and those involved in youth development programmes are fully exempted from rates and private sports clubs receive a 40% rebate; and

 Properties valued at less than R200 000 will continue to receive free refuse removal services. This threshold has been increased from R150 000. The cost of the social package available to indigent households is largely financed by national government through the local government equitable share allocation.

Madam Speaker, these concessions should lessen the burden of the rising cost of access to essential services and demonstrate the City of Johannesburg’s commitment to pro-poor policies and programmes designed to assist indigent and marginalised communities particularly in the current economic environment.

CONCLUSION

Madam Speaker, the budget we have presented here today will ensure that we fundamentally change the financial structure of the City in order to change our course towards the type of city we desire. We desire a city that is developmental in nature, spatially integrated and united, liveable, embraces inclusive economic growth and allows us to remake ourselves as a city. In the coming months and years parts of Johannesburg will resemble a massive construction site as we start to realise the Corridors of Freedom. This activity will, inevitably result in short-term inconveniences for residents and businesses in the affected areas. However, I can assure you that the long-term gains resulting from Transit-oriented Development will far outweigh the short-term pains we might experience. Our developmental approach to the public works programme will leverage on the community-based developmental service delivery model. In this way 50 000 sustainable job opportunities should be created through the extensive infrastructure investment programme. I call on the people of Johannesburg to support these and other projects currently underway as we continue shape the City to our heart’s desire. Madam Speaker, I have the honour to table the 2013 to 2016 Medium-Term Budget to you, to Council and to the people of Johannesburg.

Thank you.

toc dep | giam can nhanh