FOREWORD ON KDM BUDGET MEETING – BY DEON VILJOEN, DOCCRA CHAIRMAN
Below is the complete presentation by the Acting Mayor Councillor Dolly Govender on the Budget for KDM 2020/21. It extends over 12 pages and we have taken the liberty to highlight areas that we thought are worth a quick skim read.
DOCRRA appreciates this report. It addresses nearly all the areas of concern that was raised by DOCRRA and provides valuable information in the financial affairs and operation of our Municipality.
The DOCRRA submission and negotiations raised many concerns. The unacceptable salary increases, the Property Rates increase, tariff increases, debt collection and provisions for bad debts, and the lack of service delivery on a range of services. For more details on this you can refer to the DOCRRA submission and Outcomes from this engagement.
During the DOCRRA negotiation with Council we presented a proposal to reduce the historical ad hoc annual rebate of 6% to zero, and in turn decrease the proposed Property Rates increase of 6% down to 0%. The net effect of this would be neutral in financial terms. However, DOCRRA had the following arguments for this proposal;
- The rebate is an annual ad hoc allowance which came about after the last Property Valuation process. The new process has commenced and DOCRRA wishes to renegotiate and firm up an appropriate rebate over a longer fixed term when the new Valuation role is tabled in February/March 2021.
- By reducing the rates increase for 2020/21, the base rate is lower and ensures that future increases are based on a lower and more appropriate base rate for ratepayers.
DOCRRA is pleased that the KDM Executive considered this proposal and met the recommendation halfway, by applying the 3% at both ends. It demonstrates the willingness of KDM to work with DOCRRA in the interest of ratepayers.
We would like to take this opportunity to thank KDM for their availability and willingness to consult and wish them all success in the implementation of the budget. DOCRRA is ready to engage with KDM every step of the way.
In conclusion, having the opportunity to work with the executive of KDM on our submission regarding the draft Budget, has enabled the DOCRRA team to obtain very valuable information and a sense of comfort on the fiscal management, governance and planning at KDM. KDM understands and acknowledges the concerns and issues, such as service delivery, underspending of various budgets and irregular expenditure, that DOCRRA, and the residents and ratepayers of the Dolphin Coast have. DOCRRA believes that, as a result of this engagement with KDM, it should enhance our ability to monitor and address these issues and concerns, more effectively.
Deon Viljoen, Chairman, DOCRRA 24 June 2020
ADDRESS BY THE ACTING MAYOR OF KWADUKUZA MUNICIPALITY, COUNCILLOR DOLLY GOVENDER, ON THE OCCASION OF THE TABLING OF THE FINAL KWADUKUZA MUNICIPALITY BUDGET AND IDP FOR 2020/2021
EDITORS NOTE: BUDGET HAS BEEN APPROVED AT 13:50 BY THE ANC & AL JAMAH, AND WAS OPPOSED BY DA, EFF & IFP
Tuesday, 23 June 2020
MADAM SPEAKER, CLLR. R.P.Z. ZULU
CHIEF WHIP OF COUNCIL, CLLR. D. NDIMANDE
FELLOW COUNCILLORS
AMAKHOSI
MUNICIPAL MANAGER AND HIS MANAGEMENT TEAM
MEMBERS OF THE WARD COMMITTEES
MEMBERS OF THE PUBLIC AND THE MEDIA
DISTINGUISHED GUESTS AND FRIENDS OF KWADUKUZA
Good Morning, Sanibonani!
I am honoured to table the Final KwaDukuza Municipality Budget and IDP for the upcoming 2020/2021 Financial Year to this august house, seven (7) days after commemorating June 16, and, two (2) days since celebrating our nations responsible fathers who work tirelessly to keep the ship sailing in their respective homes.
Comrade John Phahla, the Chairperson of YSG, thank you very much for your address to the youth of KwaDukuza on June 16, your message under the theme Youth Power: Growing South Africa Together In The Period of COVID-19 was fitting and showed how much the youth of KwaDukuza have been able to achieve for themselves and how much they have ensured that no discussion about them happens without them.
Today, we join the international community in commemorating International Widow’s Day, a day in which we celebrate, embrace and advocate for this vulnerable demographic that it also present in our communities and even amongst us as leaders. We say to these women, Qina Mbokodo Qina.
SETTING THE TONE:
My speech takes place during a difficult time globally when all economies are constrained by the decisions that have to be made in order to flatten the curve of the raging novel coronavirus, which has tested every capability of the state and has had adverse outcomes to some of our people.
As KwaDukuza Municipality, we warmly welcome the response of the state during this unprecedented time. This time has given all spheres of government a real test in terms of business continuity modelling and a first-hand survey to where the community has bottlenecks when seeking governments products and services.
Whilst we are faced with the unbearable reality of the COVID-19 pandemic and the setbacks it has brought as well as the fact it will be with us for many years to come, we need to work hand-in-hand to ensure that we realise a community envisaged by the 2019 Manifesto of African National Congress, the 2030 National Development Plan and the vision of municipality which requires to:
• Accelerate the creation of jobs and economic transformation,
• Continue to promote our country and municipal area as the preferred economic destination of choice by both foreign and domestic investors,
• Embrace the changing world and promote the fourth industrial revolution,
• Fight corruption and continue to support the work of various commissions dealing with corruption,
• Focus on opening opportunities for youth and prioritising development,
• Prioritise the fight against women and child abuse,
• Revive the functioning and financial viability of critical State-Owned Institutions,
• Strengthen the capacity of the state including local government to deliver quality services, and to
• Ensure that land reform and restitution is accelerated through the amendment of section 25 of the constitution,
OUR FOUR YEAR JOURNEY IN OFFICE:
Ladies and Gentlemen, we have been in office for the past four years and I felt it is important that as the Council we reflect on some of the milestones and achievements over the last four financial years, which we need to progressively, build on towards the end of our Full Council Term of Office.
1. KwaDukuza Municipality became the first municipality in this province and in the country, to have a fully-fledged Youth Development Business Unit. This shows that there is a continuous political will to ensure that our YOUTH are taken care off and are empowered through various development programmes offered by KwaDukuza Municipality, other organs of the state and our social partners.
2. We have continued to improve our good governance by implementing relevant oversight structures to provide leadership in dealing with IRREGULAR expenditure. We have continued to work hard to reduce the irregular expenditure and number of Section 36 transactions by complying with legislation and implementing consequence management processes.
3. We are still working towards achieving the CLEAN AUDIT outcome before the end of our current term of office.
4. We have improved our coordination with both SANRAL and DoT, and have unlocked stalled roads and approving of robots and access to their roads in various wards. This coordination has also been critical in facilitating investment in our area.
5. We continue to have strong financial viability standing as a municipality. We need to continue to implement our credit control policy to collect debts and develop new revenue streams.
6. This will ensure that the municipality remains financially sustainable.
7. We have shown an improvement in MIG expenditure, though, we need to do more in addressing the issue of poor capital expenditure on projects funded by our internal resources.
8. We have continued to provide registration fees as financial assistance to our youth pursuing tertiary education. This is an educational investment that complements the free education scheme offered by our national government.
9. We promised that will be fast-tracking the establishment of NYDA District Office within KwaDukuza boundaries. We have signed all necessary agreements to be the site of the NYDA District Office, this will further assist our youth as there will now be a diversity to offerings currently offered by the Youth Centre, such as access to vast career choices and an improvement to entrepreneurship acumen.
10. We improved the capacity of our fleet including procuring two domestic refuse pickup trucks.
11. We have promoted sports and healthy lifestyle living through various developmental programmes. As part of these programmes, we have developed new facilities, for previously disadvantaged communities, for example, Nkobongo Indoor Sports Facility, Ward 15 Combo Courts, and Shakashead Swimming Pool.
12. We are continuing to strengthen our working relationships with sporting federations to develop talent in our area.
13. We completed the restructuring of the municipality as per the 2016 Lekgotla Resolutions, with two new BUs established and functions moving across business units. We are now expecting improved efficiencies and service delivery from all Business Units.
14. We have undertaken the reforms of building plans and town planning approvals processes and we are beginning to see results. We will continue to ensure investors find it easier to invest in our area and comply with the legislation.
15. We have seen Multi-Billion Rands Investments since 2016, from both domestic and international investors, which have created necessary jobs and business opportunities for our local communities. Amongst, those developments include KwaDukuza Mall, KwaDukuza Private Hospital, Ballito Junction, Insa Pot Manufacturing and other developments that are under construction.
16. We have seen roads being upgraded from gravel to tar roads.
17. We have seen housing projects being initiated and peoples dignity restored through the issuing of title deeds, to people who they and their ancestors have been displaced for decades and categorised sub-human. We have continued to be part of the global movement on Climate Change. We have recently won the WWF’s One Planet City Challenge.
OUR COMMUNITY PRIORITIES INFORMING BUDGET:
Madam, Speaker, as the Municipality, the current year posed a different dynamic to public participation, where we had to rely on doing things virtually.
Nonetheless, this has been an intensive public participation process to identify the needs and reconfirm priorities of our communities. This process was undertaken from the month of May 2020 until June 2020. The message from our residents is very clear:
1. KwaDukuza Municipality shall devise a scheme for debtors and ratepayers in general in order to provide some form of relief.
2. KwaDukuza Municipality shall accelerate the turnaround strategy in fixing and repairing of existing streetlights in all wards.
3. KwaDukuza Municipality shall consider a rates randage increase of 3% as well as a general rebate to qualifying ratepayers of 3%
4. KwaDukuza Municipality shall continue to ensure that the economic growth is inclusive and creates opportunities for job seekers and entrepreneurs.
5. KwaDukuza Municipality shall focus on rehabilitation of roads and fix potholes urgently.
6. KwaDukuza Municipal Council shall continue to forge and support partnerships with various parties to fight crime, drug abuse and accelerate skills development.
7. KwaDukuza Municipal Council shall continue to accelerate Housing delivery including affordable and rental stock.
8. KwaDukuza Municipality shall continue to work with our social partners in urban regeneration of various economic nodes, with emphasis on KwaDukuza CBD, Shakaskraal CBD and Umhlali CBD.
9. KwaDukuza Municipality shall deal with theft of our electricity including the allegations that some of our staff members are involved in assisting people to connect illegally.
10. KwaDukuza Municipality shall focus on youth development, by ensuring that skills are provided and youth are given priority if there employment opportunities in both the private and public sector.
11. KwaDukuza Municipal Council shall continue to invest in the Beach infrastructure to support tourism growth.
12. KwaDukuza Municipal Council shall use the existing Intergovernmental Relations structures to lobby for prioritisation of the community needs. Amongst such needs identified include the following key issues:
• Lobby for the establishment of the new Police Station in our area, including the possibility of introducing mobile/satellite stations.
• Fast-track the building of the new public schools in our area, which will accommodate the growing community of Salt Rock/Ballito, Madundube, Etete and Shakashead,
• Fast-track the building, renovation and upgrading of clinics within our area,
Madam Speaker, I would like to personally acknowledge all the budget comments and inputs to the draft budget. I wish to thank each and everyone who took the time to pen their comments. We have received over 6100 submissions and this is a first for KwaDukuza to receive such volume of objections.
Needless to say, we were administratively unprepared to receive and deal with this volume of objections as we did not anticipate such volume.
However, I am very pleased that our residents, ratepayers and stakeholders are not only exercising their legally enshrined rights regarding the budget approval processes but are also taking a keen interest in the affairs of the municipality, thus strengthening our participatory democratic processes.
Madam Speaker, Section 23(2) of the Municipal Finance Management Act requires me to do two things now:
1. I am required to respond to the submissions, and
2. If necessary, I am required to revise the budget ad table amendments for consideration by the Council.
Insofar as my first responsibility is concerned, you will appreciate that it would be a practical impossibility for me to respond to each one of those objections received. I acknowledge these objections. I have studied these objections and have classified the crux of the objections as follows:
1. Objections that relate to the increases in municipal tariffs for the 2020/2021 budget year
2. Concerns about the lack of service delivery
3. Concerns about the quality of service delivery
4. Concerns about various reductions in the capital and operating budget
5. Concerns about lack of public participation on the draft budget
6. Concerns about salary increases for municipal staff members
7. Concerns that the draft budget has not taken into account the Covid-19 pandemic, the lockdown and the resultant economic downturn
Madam Speaker, my response to these objections are summarised as follows:
1. OBJECTIONS THAT RELATE TO THE INCREASES IN MUNICIPAL TARIFFS FOR THE 2020/2021 BUDGET YEAR
Madam Speaker, comments to the KwaDukuza Draft budget included comments objecting to the high water and sanitation increases for next year. As KDM is neither a water services authority nor provider, we cannot respond to this matter. These objections will need to be addressed to the ILembe District Municipality who is in a position to respond.
Insofar as domestic electricity consumption tariff increases are concerned, the draft budget proposed a 0% increase to these tariffs. It is not 6.9% as recorded in the objections.
The refuse tariff increases has been set at 4%, which is below the inflation rate.
The rates randage increase of 6%, which is above inflation is justified considering the financing needs of the municipality. However, I will deal with this matter a little later.
Applying the above tariff increases, the total monthly household bill will increase from between 0% to just under 3% from July 2020. This actual increase will be dependent upon the value of the property as well as the amount of electricity consumed. Accordingly, Madam Speaker, the total increase in monthly household billing will be below the current as well as the projected rate of inflation.
With regards to the electricity tariff increases for business, it is not 6.9% as indicated in the objections. It is 6.23%. Madam Speaker, these increases are determined by NERSA and we are bound to implement such increases. Our tariff increases for commercial electricity tariffs remain within the NERSA guidelines.
Madam Speaker, I must take this opportunity to advise Council that, as reflected in the budget documents for approval today, we still await formal NERSA approvals for our electricity tariff increases.
2. CONCERNS ABOUT THE LACK OF SERVICE DELIVERY
Madam Speaker, many in our community have indicated that there is a lack of service delivery. This cannot be accepted in its entirety.
The KDM has spent hundreds of millions of rands in the last 5 years on various core service delivery programs, projects and basic services.
We must admit that our backlogs are many and our funding constrained. We have endeavoured to maximise service delivery within the confines of our financial and administrative capacity.
That said, we will use the 2020/2021 budget to improve and accelerate on our service delivery mandates.
3. CONCERNS ABOUT THE QUALITY OF SERVICE DELIVERY
Madam Speaker, we must admit our failures in so much as we take credit for our successes. We must admit that, in certain areas, we may be found wanting in terms of quality service delivery. In order to ensure improvement in this area, the Municipal Manager is requested to ensure that suitable measurements and programs are included in the individual performance plans of all Executive Directors so that we can improve in this aspect.
Furthermore, the Service Delivery and Budget Implementation Plan must be approved and circulated to our constituents before end of July 2020 as this will assist in monitoring quality service delivery.
4. CONCERNS ABOUT VARIOUS REDUCTIONS IN THE CAPITAL AND OPERATING BUDGET
These reductions in capital and operating budget allocations were absolutely necessary Madam Speaker. This was necessitated after careful analysis of revenue collection trends experienced by the municipality during the period of the lockdown.
We have noticed that this trend may be present for the foreseeable future. The municipal billing for services also indicated drastic reductions due to lockdown. This was detailed in the recently approved Covid-19 adjustments budget.
Madam Speaker, I would like to assure the house that, as soon as KDM is made aware of our allocation of the R20bn funding National Treasury is making available to municipalities, these areas will be the first to be topped up during the legislated adjustment budget. It is rather unfortunate that, at the time of finalisation of the 2020/2021 budget, the extent of the allocation is not known.
5. CONCERNS ABOUT LACK OF PUBLIC PARTICIPATION ON THE DRAFT BUDGET
Madam Speaker, it is rather unfortunate that, due to the lockdown and the resultant prohibition of public gatherings, KDM, like all other municipalities, was prevented from holding the usual many public participation meetings that we have been so accustomed to in the past.
However Madam Speaker, the fact that we have received a record number of over 6100 objections to our budget, with the large majority of these objections indicating detailed analysis of our budget is proof that our community has intimate knowledge of what is contained within the draft budget tabled for public comments, and, therefore, the aim of public consultation has been achieved
6. CONCERNS ABOUT SALARY INCREASES FOR MUNICIPAL STAFF MEMBERS
Madam Speaker, there are elements of budgeting and expenditure which remains in our control, and there are elements that remain outside of our control and influence.
Salary increases for Councillors are determined nationally, gazetted and then implemented after a lengthy process has been followed. These increases are determined by the Minister of CoGTA.
For the 2019 2020 financial year, Councillors received a 4% salary increase.
Salary increases for Senior Managers are also similarly determined nationally by the Minister of CoGTA. Senior Managers received an increase of just 2.8% with effect from 01 July 2019.
Irrespective of the budget approved for the above categories, a determination is made by the relevant Minister after following legislated procedures.
Salary increases for the rest of Council staff are governed by the Bargaining Council and in this regard. Agreements with all relevant parties have been signed which gives effect to the salary increases for next year.
7. CONCERNS THAT THE DRAFT BUDGET HAS NOT TAKEN INTO ACCOUNT THE COVID-19 PANDEMIC, THE LOCKDOWN AND THE RESULTANT ECONOMIC DOWNTURN
Madam Speaker, you will recall that the draft budget was to be tabled on 26 March 2020. However, due to the lockdown, that Council meeting could not take place.
Due to the effects of the lockdown, the initial draft was completely re-worked to take into account these changed circumstances and, accordingly, the draft budget that was tabled in May 2020 did take into account the effects of the pandemic. There was a significant reduction in allocations as well as revised budget assumptions.
Madam Speaker, let me now deal with my section 23(20(b) responsibilities as enshrined in the MFMA. I am now required, if necessary, to table amendments for consideration to Council. The Council is hereby advised as follows:
1. The final proposed capital budget has been increased by some R63m when compared to the draft budget. This will address some of the concerns expressed regarding the reduction in the capital budget
2. The reductions to some of the key service delivery areas like grass cutting and security will be topped up as soon as National Treasury advises KDM of our allocation of the R20bn that has been set aside for municipalities to assist them through the Covid-19 pandemic revenue loss
3. The budget for the Senior Management remuneration increases have been reduced to 3.5%, and this will only be implemented if approved by the National Minister of CoGTA
4. The budget for Councillor allowances increases have been reduced to 5%, and this will only be implemented if approved by the Minister of CoGTA
5. The Council is bound to honour the staff salary increases for the rest of our staff, as this has been agreed to at a national level via signed agreements
6. That the increase in the rates randage be limited to 3% and the general rebate granted to all qualifying ratepayers be reduced to 3%
Madam Speaker as the above will not affect any of the overall budget figures, there is, therefore, no need for me to table an amended budget. However, I appeal to Council to consider for formal approval a rates randage increase of 3% as well as a general rebate to qualifying ratepayers of 3%.
2020/2021 BUDGET:
Our budget for 2020/2021 Budget though compiled under very trying circumstances whilst attempting to account for numerous factors predominately caused by the COVID-19 pandemic.
Revenue
The total revenue budget amounts to R1,891,042,680 Billion for the 2020/2021 financial year. Key Considerations of the revenue budget are as follows:
• Agency Services consist of Vehicle Licencing and Testing fees. It is assumed that this income stream will remain constrained during the upcoming financial year.
• Given the decreasing interest rate, interest earned has been based on a conservative approach.
• Service Charges consists of the following income streams:
o Electricity : R 919,531,920 Million and
o Waste Management : R 65,363,208 Million
• All Electricity income and underlying tariffs both this in this report, resolutions or any other related document are subject to NERSA approval.
• The majority of Fines, Forfeits and Penalties compromise traffic-related fines. Given a large degree of non-payment a corresponding provision for non-payment has been recognised.
• Operational transfer consists mainly of Equitable Share and various other conditional operating grants.
Expenditure
The total expenditure budget amounts to R1,890,949,224 Billion for the 2020/2021 financial year. Key Considerations of the expenditure budget are as follows:
• Bulk purchases are budgeting to increase at 6.9%. Council has identified energy losses as a key priority and has embarked upon various mechanisms to reduce energy losses.
• Employee Related Costs have been budgeted to increase at 6.25%.
• Employee costs are under 25% of the total budgeted expenditure of the municipality.
• Interest dividends comprise significantly if interest expense towards Councils loans.
• Depreciation and asset impairment is expected to increase as a result of the completion and commissioning of various completed capital projects.
Capital Budget
The total capital budget amounts to R295,382,305 Million for the 2020/2021 financial year. 87% of the Capital budget is attributed towards the direct Service Delivery business units of Community Services & Public Amenities, Civil Engineering & Human Settlements and Electrical Engineering.
It must be stressed that the initial requests for both the operating and capital budget were significantly higher and were reduced on the basis of affordability.
Proposed Tariff Increases:
In order to fund the operating and capital budget as cited above in my speech, the following increases have been proposed:
• Rates: 3%
o The general rates rebate has now decreased to 3%
• Refuse: 4%
• Electricity:
o 0% increase in domestic and indigent
o Increase in commercial, industrial, domestic with bulk meters and other by 6.23%
o Increase in Sappi by 6.9% as its aligned to Eskom tariffs
o Increase in electricity basic charges in all categories by 5%
• Other sundry tariffs on average of 6%
I am certain that our decision on rates, will be most welcomed by our residents and this will put paid to the fact that we did, indeed, listen to them when they spoke to us.
WHAT DOES THIS MEAN TO OUR CONSUMER?
On average, according to our billing scenarios which takes into account the average electricity usage and compares the rand value effect of rates, electricity and refuse increases year on year:
1. High Residential properties with a valuation of over R4 Million we estimate an overall increase of 2.18% compared to the current financial year.
2. Medium Residential properties with a valuation of R1,25 Million we estimate an overall increase of 1.67 % compared to the current financial year.
3. Medium-Low Residential properties with a valuation of R800 000 we estimate an overall increase of 1.22 % compared to the current financial year.
4. Low Residential properties with a valuation of R200 000 we estimate an overall increase of 0.96 % compared to the current financial year.
5. Indigent Households we expect a 0% increase.
6. Commercial properties with a valuation of R4 Million we estimate an overall increase of 6.12 % compared to the current financial year.
7. Maximum Demand Medium properties with a valuation of R16 Million we estimate an overall increase of 6.18 % compared to the current financial year
Madam Speaker, we have consulted and engaged on the budget with all relevant stakeholders, the Budget Steering Committee and stakeholders from the community. This will ensure that the municipality is able to go back to basics, by ensuring that the multi-billion rand worth of Council assets are maintained and rehabilitated.
We would like to reinforce our council position, that the implementation of all the infrastructure projects and contracted services advances RET and creation of decent jobs.
We want to see more women-owned and youth-owned businesses being awarded contracts and being sub-contracted in line with our 45% clause in SCM Policy. We also further direct management to ensure that the SCM processes start from today so that all projects and contracts are awarded before the end of the 1st Quarter of the next financial year.
As a Council, we re-emphasize, that procurement shall be fast-tracked inline the due SCM processes. We don’t want to see an increase in irregular expenditure but we want to see quality service delivery.
I would also like to thank the Director: IDP and the Director: Budget and their teams for ensuring that there is an alignment of the Budget and IDP and working tirelessly to comply with legislative timelines.
To the Finance Team thank you for aligning the budget to the mSCOA requirements for preparing the budget process. Job well did. As a Council, we have done our level best and followed all necessary legislative processes to finalise the 2020/2021 Budget and IDP.
I, therefore, table the 2020/2021 Budget for consideration by Council.
Thank you.
Issued by the KwaDukuza Municipality Corporate Communications Unit, for enquiries please contact:
Sipho S. Mkhize (CPRP)
Media Liaison Officer
☎ : 032 437 5133
📱 : 063 030 7475
📧 : Sipho.M@kwadukuza.gov.za