Mayor’s Draft budget speech

Mayor’s Draft budget speech

At a council meeting held, 30 March 2022, the Executive Mayor, Ald Annelie Rabie, delivered a pro-poor budget speech, quoting from Dave Ramsey, Mayor, said , “a budget is telling your money where to go, instead of wondering where it went”

The following are transcripts of mayor’s pro poor budget speech:

Drafting a budget is never an easy task. Budgets are a balancing act and more often than not it is regarded as a guideline only.

In our own lives we often will overspend on one item and believe ourselves that next month we will top it up again…..that seldom happens.

Government budgets are notoriously short cashed. Budgets also invariably fall short of meeting citizen expectations, fuelled by election undertakings.

The interface between the 3 spheres of government in relation to the transfer of public funding from the national fiscus to local municipalities remain problematic.

The census is one vehicle used by National Government to allocate funding to provincial and local spheres of government.

Hence participation in the census is a key driver of whether Overstrand will receive our rightful share from the national fiscus.

Municipal Councils and the Mayor specifically, are the custodians of public money and legislation places a huge responsibility on our shoulders to accrue and expend public money.

The MFMA S52, inter alia, states: The Mayor of a Municipality:

(a) MUST provide general political guidance over the fiscal and financial affairs of the municipality – no choices, MUST

(b) In providing such general political guidance, may monitor and, to the extent provided in this Act, OVERSEE the exercise of responsibilities assigned to the Accounting Officer, but MAY NOT interfere in the exercise of those responsibilities

(c) MUST take all reasonable steps to ensure that the Municipality performs its constitutional and statutory functions within the limits of the Municipality’s approved budget

Over the years many mechanisms have been put in place to ensure compliance, checks and balances to monitor and evaluate how Councils expend the public’s money.

Hence my commitment to open and transparent government.

Ethical business processes are the cornerstone of a corruption free government.

In terms of S152 of the Constitution, the objects of local government are

1- To provide democratic and accountable government for local communities
2- To ensure the provision of services to communities in a sustainable manner
3- To promote social and economic development
4- To promote a safe and healthy environment and
5- To encourage the involvement of communities and community organisations in the matters of local government.

The above is important as these have to reflect in the IDP, which in turn informs the Budget and translates into the high-level Service Delivery Budget Implementation Plan (SDBIP).

The sustainability of a Municipality is a key driver of building investment trust. Whilst Overstrand Municipality is currently financially sound and meets the prescripts of sustainability, we do have to cut our coat according to our cloth.

We currently have sufficient funding to cover 4,6 months of operational expenditure. The norm set by National Treasury is 1 to 3 months. I am comfortable that we are in a safe position.

The economic and wealth profile of Overstrand often blurs the reality of a growing level of generic poverty, systemic unemployment and inability to create personal sustainable livelihoods.

Political stability, good governance and operational infrastructure drive investment, which drives the creation of career-based job opportunities. This is the only sustainable road out of poverty and inequality.

Mr Speaker, today I am presenting to you and Council, a DRAFT budget with the request that Council supports the document. Please may it, on adoption, be circulated and published widely so that the public can engage with the document.

The MayCo and myself will visit each town to discuss the draft and to listen to alternative suggestions.

Similarly, I requested the Accounting Officer to ensure that the immediate next meeting of Ward Committees will engage with the document as part of their representation of the organisations and/or geographical blocks.

It is therefore incumbent on ward committee members to ensure that their constituencies are afforded the opportunity to engage with the document.

Insofar as the document before us is concerned, I wish to express that it does not yet meet all my expectations of the 3 C objectives of this term of office.

Whilst it is a good start, it needs further translation into the next generation IDP.

As you are aware, Mr Speaker, Council adopted a resolution that the lifespan of the existing IDP will be extended for the 2022/23 financial year.

This gives us an opportunity to with effect August 2022 start the design of the new generation IDP with full focus on manifesting the 3C’s in pursuit of our overall vision of an #overstrand4all.

Let me turn to the proposed budget for the 2022/23 financial year:

1. The budgeted revenue excluding capital grants received, amounts to R1,537,183 billion.

2. The budgeted operational expenditure amounts to    R1,615,768 billion – this includes non cash items like depreciation.

Hence an accounting deficit of   R     78,586 million is reflected

3. The Capital budget amounts to     R   212,808 million – It is to be used for very specific Capital projects

B. Projected Revenue per functional classification, including capital grants are:

Governance and administration               R   379, 688 million
Community and Public Safety                   R   167,619 million
Economic and Environmental services    R     24, 599 million
Trading services                                           R1 050,266 Billion

Trading services include electricity/energy; water management, waste water management, and waste management

TOTAL             R1,622,023 Billion

C. Projected Operational Expenditure per functional classification, are:

Governance and administration              R   315,492 million
Community and Public Safety                  R   280,648 million
Economic & Environmental Services      R   198,519 million
Trading services                                          R   817,550 million

TOTAL               R1,615,768 Billion   (with a nett surplus of R6,255 million)

A surplus on any trading service is crucial as it is intended and required to generate surplus cash to partly fund capital expenditure such as vehicles and ICT infrastructure. This is to ensure adequate cash backing of reserves and funds.

D. Employee and Councillor related remuneration.

In the budget a provision of R519,5 million is made for employee related costs and the remuneration of Councillors. This is 32,15% of the total operating expenditure and is within the National Treasury norm of 25 – 40%.

An additional amount of R22.4million is provided for as a long-term liability (post-retirement benefits) and therefore not cash remuneration. This is a statutory provision which we may not ignore.

In respect of Councillors, the amount provided for is R12,4 million

After LGE2021 the number of Councillors increased from 25 to 27.

During the past two financial years, councillors have not received an increase. The remuneration of councillors is contained in the so-called Upper Limits Notice and it is signed at the behest of the President. No indication as yet has been given whether councillors will receive an increase for the 22/23 financial year.

The Upper Limits document for Municipal Managers was published earlier this week and no increase is provided for.

In keeping with this, it is proposed that no increase be awarded the current Directors and other senior managers.

However, the SALGBC in 2021 signed a wage and salary collective agreement for Municipalities for for a 3 year period from1 July 2021 to 30 June 2024. It must be implemented by all municipalities countrywide.

The proposed increase in the salary budget is 4.9% and notch increases, which average 2% have also been budgeted for in view of the Agreement, thus a 6.9% increase.

Staff vacancies are still frozen and may only be filled following a motivation to The Municipal Manager. No new posts were considered for inclusion in this draft budget.

E. Mr Speaker before I announce the new tariffs on basic services for the next financial year, allow me to reference the cost of rendering services.

With regards to electricity our total expenditure is R558,465,874 million and our income R606,288.589 million which allows for a surplus of R47,822,715 million or a margin of 7.89%

In the case of water, our expenditure is R145,657,065 million against an income of R153,274,053 giving us a surplus margin of 4.97% or R7,616,988 million

Wastewater management provides for a net surplus of 9.64% or R11,428,755 million. This is against an income of R118.510,514 and an expenditure of R107,081,759

Waste management, Mr Speaker carries with a total income of R98,115,500 million against an expenditure of R98,107,860, leaving a surplus of 0.01% or R7,640 million.

F. Mr Speaker, allow me to now deal with the tariffs for the next financial year.
The following increases are proposed:

  1.  Rates    5.9%

    A rebate of R15 000 on all residential properties will be rewarded. An additional R35 000 on improved residential properties will also be awarded.

    The cent in the Rand assessment on urban residential erven with improvements, will be R0,00657 X the property value = R XYZ plus a further 20% rebate of the property rates payable if used for residential purposes only.

    The cent in the Rand assessment for bona fide agricultural land is R0,00164 X the property value

  2. Sewer    4.3%

  3. Refuse   5.9%

  4. Water    4.9%

  5. Electricity 10.33%, indicative, based on Eskom increases

    The average increase of this basket of services EXCLUDING Electricity amounts to an average increase between 5% and 6%, adding the Electricity increase results in a basket  increase above 8%

  6. Sundry tariffs  – ranging from 4.5% to variable deductions or to a cost recovery adjustment.  The extended list of tariffs is attached for ease of reference.

  7. Interesting to note that as part of our pro-poor approach to this budget, I am pleased to announce that for indigent households, the benefit of 6 kl of free water will be increased to 10 kl of water effective 1 July 2022 and in respect of sewerage the 4.2 kl free sewerage will increase to 7 kl.

  8. Overstrand at the moment has a total household count of 35 983 with the informal count being 3 779. The number of informal households quoted here is definitely outdated and will be verified to include the correct number in the final IDP and budget figures.

    As a further contribution to our pro-poor approach, the increase in tariffs under the control of the municipality are contained.

    For example, we reduced the tariffs to launch fishing boats substantially. In other instances, we kept the tariffs at the same level as in 2021/22 and/or we scrapped tariffs all together.

  9. Rebate of 50% for grave site:

    Applicable to Tariffs S15A1, S15A2, S15A4 & S15B on the following conditions:

    * Overstrand local household with gross household income per application of R0-R4100

    * Applications must be accompanied by sworn declaration of household income of the immediate family of the deceased.

  10. We also embarked on an adjusted indigent policy trajectory in that we wish to use an increased amount of our equitable share to provide for indigent subsidies. During the budget roadshows this matter will be further explained and highlighted.


Comparison between basic charges 2021/22 and the increases for 22/23 (Vat excluded)

Electricity    from R408.17 to R450.33 (10.25%)

Water       from          R148,35 to R155.62 (4.9%)

Refuse      from          R201.59 to R213.28 (5.9%)

Sanitation    (1)   from R132.20 to R137.88 (4.3%) (can connect to network)

                      (2)   from R  89.08 to R  92.91  (4.3%) (cannot connect to network)

Availability charges are needed to ensure that the fixed costs to have a 365 day operational service and networks in place to provide a service to every erf across the Overstrand, at any time that the service is required and at the capacity and place where it is needed.

G. Division of revenue allocation (DORA) grants have been published and are therefore receivable from the National and/or Provincial Governments R350,178,000 million

The contribution is as follows:

Equitable Share                                    R141,896,000 million
FMG                                                        R 1,550,000 million
EPWP                                                       R  2,593,000 million
MIG                                                         R 24,628,000 million
INEP (electricity)                                    R   21,331,000 million

Energy efficiency & demand side management     R 5,000,000 million
Water infrastructure grant                      R 27,439,000 million

TOTAL                       R 224,437,000 million

Resource funding K9 unit                                    R 2,420,000 million’
Reaction Unit                                                         R 2,958,000 million
Human Settlements Development Grant       R 111,740,000 million
Construction of Transport Infra-structure           R 140,000 thousand
Provincial Library Services Grant                        R 8,258,000 million
Thusong services centres grant                           R   150,000 thousand
Community Development Workers                      R   75,000 thousand

TOTAL                                  R 125,741,000 million

It is important to note that these amounts consist of both operational and capital budget transfers.
MIG, INEP, Water Infrastructure grands and a portion of the Housing grant are examples of capital grants.


The Overstrand Capital budget ONLY amounts to R212.8 million for 2022/23 and is 11,3% less than 2021/22. The decreased own funding from surplus is due to the limited availability of cash for capital investment for the 2022/23 capital budget.

The dedicated infrastructure upgrading and/or replacement project for water and sewerage networks had a 3 year lifespan, which came to an end on 30 June 2021, except for a roll-over amount of R54 million which was spend during the current financial year.

Our own funding through new borrowings is anticipated at R50million. Borrowings contribute 43,9% of the funding over the 2022/23 MTREF. Internally generated funds contribute 3,8% and capital grants 52,18%

For 2022/23 an amount of R152,6million has been appropriated for the development of basic services infrastructure which represents 71.1% of the total capital budget f R212,8 million

Wastewater infrastructure has the second highest allocation at R45,9 million or 31.1%;

Water management at 25,7% or R39,2 million

Waste management represents 1,3% or R1,9 million and 42,8 % or R65,3 million is going towards electricity.

Over the 3-year MTREF, the capital housing grant expenditure relating to housing infrastructure provision amounts to R67,4 million.

The top 10 capital projects are:

  1. Low-cost housing construction contracts across the Overstrand @ R39,785,000 million

  2. The new 66 kilovolt substation for Franskraal, Kleinbaai & Birkenhead in Gansbaai @ R37,500,000 million

  3. The upgrading of pumpstations & rising mains across Overstrand @R23,639.000

  4. Kleinmond Wastewater Treatment Works refurbish/upgrade @ R20,200,000 million

  5. Replacement of waterpipes across the Overstrand receives R16,472,000

  6. Electrification of low-cost housing areas also across the Overstrand receives R16,000,000 million

  7. R11,013,000 for the Masakhane Housing project in Ward 2 comes in at number 7

  8. Number 8 also goes to Ward 2 for the upgrade of water lines & a new booster pumpstation valves

  9. Ward 1 receives R5,615,000 for the upgrading of bulk water supplies

  10. And nr 10 relates is the Zwelihle Library in Ward 12 at an amount of R4,373,611 million.

These are only the Top 10 and the budget schedules reflect further capital projects and are open for inspection.

I wish to thank the CFO, the Directors and the Municipal Manager for their support in drafting this budget.

Let this be the beginning of the journey to an #overstrand for all.


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