Programme Director,
Colleagues of the Mayoral Committee,
Officials of the City,
Members of the media,
Ladies and gentlemen.
Welcome to this media presentation and thank you for the opportunity to present you with a brief overview of the City’s 2013 Budget. Today we will table a ground breaking budget that exceeds R40 billion. This consists of an operational budget of R36.3 billion while R7.5 billion is allocated towards capital expenditure.
We are also taking the unprecedented step to become the first municipality in South Africa to present a multi-year capital budget of R30.1 billion to Council for approval. It should be noted that the self-funding part of this Budget will grow to above 65% from a current average of 39%.
We are able to achieve this despite the challenging global and regional economic environment. 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 attribute these achievements to effective financial management and sound planning of our operations. Within the City of Johannesburg 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.
Members of the media,
You will recall that the Executive Mayor of Johannesburg, in his recent State of the City Address made major announcements on the City’s intention to reshape our urban form, make a decisive break with apartheid spatial planning and construct a future based on equity, accessibility and sound economic principles.
At the core of this approach is the emphasis on our Corridors of Freedom. Through this Transit Oriented Development (TOD) we will knit the urban form together and facilitate 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. Through this new approach we will also slow down the process of urban sprawl and the uncontrolled spread of low-density developments on the fringes of the City.
Johannesburg will become an urban environment, characterised by walkability, accessibility and safe neighbourhoods and where we will promote and support cycling and the use of non-motorised transport in the City.
You will note in the detail of the Budget that all of our programmes and votes are being geared towards the achievement of this broad vision. For example in Housing we are shifting away from the exclusive focus on RDP housing to rental and mixed-use housing. The impact of this will be higher density developments that will grow up around the corridors and development nodes, resulting in a more efficient and liveable city.
Programme Director,
On the expenditure side of the 2013/2014 Budget I want to remark briefly on some of the highlights. The Sustainable Services Cluster which oversees and coordinates the bulk of the City’s service delivery obligations receives R21.9 billion, which is more than half of the total operating budget of the City.
This Cluster will take the lead in the planning and implementation of the Corridors of Freedom through the planning and 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.
Within this cluster, City Power receives an operating allocation of R13.2 billion and capital budget amounting to R6.8 billion. Capital investment will focus on the improvement of the quality of supply and quality of service as well as key projects such as 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.
The budget for Joburg Water consists of an operating budget of R5.9 billion and R3.7 billion for capital projects in places such as Orange Farm, Doornkop West, Protea Glen, Roodepoort, Diepsloot, Sandton, Alexandra and Bramfischerville. We are continuing 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.
The full details of the allocations to the various departments and Municipal Entities are contained in the Budget speech and the attached documents we will be tabling in Council. It includes an amount of R136.6 million for Environment and Infrastructure. Early next year Johannesburg is hosting 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.
Department of Housing receives an operating budget of R634.1 million and capital budget of R2.4 billion. Joshco is allocated a capital budget of R1.8 billion while Pikitup’s R1.6 billion operating budget which will enable it to continue its focus on the round collection of refuse; street and Inner City cleaning; separation at source; the cleaning of informal settlements and addressing illegal dumping.
Ladies and gentlemen,
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. We are providing for a wide range of capital projects in the medium term, which include the upgrading of community facilities such as recreation centres, swimming pools, libraries and sports grounds.
In the health sector we are providing for the construction of the new Freedom Park clinic in Devland as well as substantial upgrades to various clinics across the City.
The operating Budget for Public Safety will grow by 5.1% to R2.3 billion with a capital budget allocation of R432.2million. The 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.
The Economic Growth Cluster receives an operating budget of R3 billion and a capital budget of R9.1 billion. You will note that the projects and programmes initiated by this cluster are designed towards stimulating economic growth through targeting labour-absorbent activities as well as the promotion of innovation through “green economy” initiatives.
There is also a strong emphasis on the City’s vital economic infrastructure, the resurfacing of roads, the maintenance of storm water and traffic signals and the roll-out of our broadband network.
Ladies and gentlemen,
The tariffs for water and electricity that I will announce are largely outside of the control of the City because they are determined by external agencies – Eskom, Nersa and Rand Water.
Madam Speaker let me reiterate: 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.
However, I am pleased to say that the average increase for electricity for 2013/14 is 7.32%. This is lower than the 8% Eskom increase approved Nersa. There is an increase of 7.32%, on average, for water – which is in line with the Rand Water increases.
Through the city’s stepped tariff structure for electricity and water services residents can, however, manage their own monthly bills. The principle is: the higher the consumption, the higher the cost per Kilowatt- hour of electricity or litres of water.
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 meters that are currently in use in households, businesses and industry across the City.
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. We are keenly aware of the fact that, 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.
Ladies and gentlemen,
I am pleased to say that we have succeeded in limiting some of the increases following our recent city-wide public consultation process. I will also announce some 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.
- 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;
- Properties valued at less than R200 000 will continue to receive free refuse removal services. This threshold has been increased from R150 000.
- It should also be taken into account that more than 120 000 households in Johannesburg currently receive completely free water, electricity and waste removal services from the City in terms of our Expanded Social Package Policy.
Programme Director,
The budget presented today will result in fundamentally changes to the financial structure of Johannesburg and enable us 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.
I thank you!
