20082009 BUDGET SPEECH PRESENTED BY by monkey6


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									              2008/2009 BUDGET SPEECH PRESENTED BY
                       ALDERMAN S B LARKAN
                 HELD ON THURSDAY, 28TH MAY 2008

My sincere greetings are extended to

The Speaker, Dr N G Donda
Mayors from our KZ nodes
Deputy Mayor Cllr. I J Naidoo
Exco Members
Municipal Manager Mr B B Biyela
Deputy Municipal Manager Mr D Lubbe
Heads of Department
Members of the Media and Community

I am indeed humbled as Mayor of Uthungulu District Municipality
to be afforded the opportunity of presenting a collective 2008/2009
Budget in terms of Section 24 (1) of the Municipal Finance
Management Act (MFMA).

In terms of the MFMA No 56/2003 Section 16, a Council of a
Municipality must for each financial year approve an annual
budget before the commencement of that particular financial year.
The Act further determines that the Mayor must table the annual
budget at a Council meeting at least 90 days before the start of the
budget year.

This policy must be well analyzed, implemented and understood
against the legislative background as the entire process and final
budget acceptance plays a critical and influential role in an attempt
to realize diverse community needs. Central to this, the
formulation of a municipal budget must take into account the
government’s macro-economic and fiscal policy fundamentals.

The objective of the budget policy is to set out:

*    The principles which the municipality will follow in
     preparing each medium term revenue and expenditure
     framework budget;

*    The responsibilities of the Mayor, Accounting Officer, Chief
     Financial Officer and other senior management in compiling
     the budget;

*    To establish and maintain procedures ensuring adherence to
     Uthungulu’s IDP review and budget processes.

Budgeting principles determine that expenses may only be incurred
in terms of the approved annual budget or adjustment budget and
within the limits of the amount appropriated for each vote in the
approved budget.

The Medium Term Revenue and Expenditure Framework
(MTREF) budget must at all times be within the framework of the
Municipal Integrated Development Plan (IDP).

The entire “Budget Preparation Process” (BPP) has been
meticulously adhered to by the Accounting Officer, Chief
Financial Officer and Mayor in terms of

*    IDP process plan;

*    Budget time table and key deadlines;
*    Strategic workshops
*    Budget related policies on tariff setting, credit control, debt
     collection, indigents, investments, cash management and
*    Capital and Operating Budget format;
*    Realistically expected revenues by major source.

Public Participation processes were undertaken during November
2007 with relevant stakeholders by means of IDP alignment
sessions and forum meetings, including community road shows
conducted in each of the District’s local municipalities as depicted
on Page 4 of Council’s Agenda.

The final draft IDP Review was approved by Council and
timeously submitted to the Provincial Department of Local
Government while the final IDP and budget must be approved and
submitted by 10 July 2008.

During the month of April 2008 further public hearings on the IDP
and budget took place in the form of road shows at each of the
District’s KZ nodes as detailed on Page 5 of Council’s Agenda and
in compliance with Section 23 of the Act.

I was extremely encouraged by the exceptionally high attendance
of community members at all the road shows and the individuals’
comprehension and participation is indicative of a better
understanding with regards Local Government matters hence my
reason for referring to a collective budget.

The presence and engagement of Amakhosi and Izinduna is further
to be welcomed and acknowledged and all endeavours will be
made to enhance this important partnership.

Publication of the Budget in terms of the MFMA and Municipal
Systems Act was adhered to in that the draft IDP and Budget was
advertised for public comment in the relevant newspapers over a
period of 21 days with one response from the KZN Provincial
Government in that compliance must be ensured with regards:

*    The building extensions and Phobane Regional Water
     Scheme Loans of R46 million in terms of Section 46;
*    Administering of Bursaries in terms of Section 164.

In the past decade Local Government has experienced a mass of
legislation regulating its functioning and the question for one to
ponder over is whether the sheer volume, nature and scope of this
legislative framework is actually facilitating or hampering
achievement as Local Government is after all the delivery arm of

The same set of rules applies to all Municipalities however large or
small and regardless of the gaps in human and financial resources
regulations have to be compiled with.

Our dedicated, conscientious and reputable officials under the
credible guidance of the Municipal Manager Mr B B Biyela,
together with our internal auditors, finance committee and
scrupulous minded Councillors has once again resulted in
Uthungulu receiving an Unqualified Audit Report for the sixth
consecutive year and I pay tribute to all concerned as this is the
ultimate judgement on any Municipality.

Our expenditure has been aligned to the five key strategic areas
*    Economically sound District
*    Effective infrastructure
*    People empowerment
*    Integrated environment
*    Leadership excellence

with infrastructure relating to water and sanitation receiving the
major portion of budget allocation.

Operational and Capital sources of income predominantly
comprise of grants and subsidies, and with the abolishment of
business levies in 2006 a Levy Replacement grant which is no
substitute for the previous form of levy collection by Uthungulu in
terms of total potential revenue income collected.

Placing dependence on the Levy Grant makes it difficult to predict
the future in terms of achieving the 2012 targets for water and
sanitation services as prescribed by National Government and
unless substantial additional funding is received the future targets
are simply unattainable.

The reviewing of tariffs is always a contentious issue especially so
this financial year which has seen increases in almost all sectors of
the economy viz

*    Interest rates;
*    Petrol hikes
*    Food commodities
*    Property rates
*    Electricity and many more.

It makes it extremely difficult to then still place further burdens on
people but taking into account the affordability levels of
communities the Council is I believe being more than considerate
with the proposed increases.

The entire Multi Year Budget for 2008/2009/2010/2011 is
encapsulated on Pages 11 to 17 of the Agenda and following are
some material features embodied therein:

*   Operating Revenue by source is depicted on Page 11 and
    totals R386 816 million for the ensuing year increasing to
    R394 272 million and R411 210 million in the proceeding
    two financial years.

*   Operating Expenditure by Vote is depicted on Page 12 and
    totals R276 922 million for the ensuing year increasing to
    R299 555 million and R334 503 million in the proceeding
    two financial years while the Operating Expenditure by
    General Financial Statistics (GFS) classification is depicted
    on Page 13 and 14.

*   Capital Expenditure by Vote is depicted on Page 14 and
    totals R170 894 million for the ensuing year decreasing to
    R124 718 million and R91 707 million for the proceeding
    financial years while the Capital Funding by Source is
    depicted on Page 15 and Capital Expenditure by GFS
    classification on Pages 16 and 17.

*   Operational Revenue has increased by 26% from year 2007/8
    by R8 million, largely due to an increase of interest income
    from external investments and a reduction in revenue from
    solid waste services.

*   Grants and subsidies have increased by 39% (R94 million)
    largely as a result of increases in the municipal infrastructure
    grant (R21 million), an R11 million increase in the levy
    replacement grant and an additional R17 million towards
    equitable share. In addition a further R27 million has been
    allocated towards regional bulk infrastructure and R5 million
    to backlogs in water and sanitation projects. uMhlathuze
    Municipality has also committed R5 million towards the
    2010 Soccer Stadia, the implementation of which is the
    responsibility of Uthungulu. A further allocation of R8

    million in grant funding which will include a synthetic track
    for the 2010 Stadia.

*   A loan of R20 million will be secured for the implementation
    of a regional bulk water scheme from Phobane Dam to
    Mthonjaneni and ultimately Ntambanana together with a
    further amount of R26 million for the amalgamation and
    upgrading of Uthungulu House Buildings . The final
    decision to fund these projects from borrowings will however
    depend on available 2007/8 surpluses.

*   Surpluses from revenue in the 2008/09 budget year are able
    to fund major projects such as our final R3,4 million
    contribution towards the John Ross Highway, drought relief
    programmes and upgrades of Water Schemes.

*   Operational expenditure for 2008/09 when compared to the
    2007/08 full year forecast has decreased by R36 million.
    This is largely due to the inclusion of in-progress projects
    from the 2006/07 financial year.

*   Of concern is the income earning potential of the
    Municipality, as a result of the abolishment of levies, and the
    allocation of non-revenue earning or 100% government grant
    funded mandates such as Disaster Management and
    Environmental Health in consideration that the operational
    income of the municipality only accounts for 13% of total
    revenue in 2008/09.

*   Total Capital and Operating Budget : R447 816

*   Equitable Share allocation : R73 788 000

*   MIG : R99 994 000

*     Replacement Levy Grant : R107 314 000

As one will note from the aforementioned figures our 2008/9
budget is by far the largest to date and while it will certainly assist
in service delivery it is a far cry from what is actually required to
eradicate backlogs.

*     Proposed Water Tariff increase for the various categories
      range from 6% for domestic consumption and up to 23% for
      commercial which in monetary terms for the various
      categories is deemed most reasonable, it being noted that the
      6 kilolitres free water is for domestic consumption only while
      availability charges for all urban areas will increase by R1-71
      or 6%.

*     Standpipe and un-metered household connections will
      increase by R1-03 and R2-47 or 6% respectively in rural

*     Other tariff increases are detailed on Pages 21, 22, 23, 24, 25
      and include amongst others

      >     Cemetery : 6%
            (Internments, tombstone erection, additional depth
            grave, reservations, wall of remembrance and

      >     Sanitation : 6%

      >     Solid Waste : 6%

           (Building rubble, de-listed waste, tyres, green waste –
           sewer sludge)

     >     Electricity supply to Nkandla, our sole such
           responsibility which will experience an increase of 15%
           for the various consumer’s load usage including
           consumers with single phase and maximum demand
           meters, the increase being subject to NER approval and
           we hope that no further increases will be imposed on us
           by the Authorities.

*    Salaries are 29 % of total expenditure which is deemed
     acceptable while a salary increase of 8.3% for staff and 7%
     for Councillors has been budgeted for in terms of agreements
     with SALGA and the Municipal Unions.

Matters of concern are National Treasury’s allocation of R18-00
per household towards the Municipal Health Function which is
clearly insufficient and may compromise the service and similarly
the unfunded mandate of the Disaster Centre where only the
minimum services have been budgeted for.

In conclusion I wish to thank the Municipal Manager Mr B B
Biyela, Chief Financial Officer Mrs Candy Stanniland, Managers,
Officials, all Councillors and the general public for their active and
collective participation in the entire process by diligently engaging
and in so doing accepting and taking ownership of the budget.

Achieving our goals has required remarkable leadership and
attention to detail and this has always been at the forefront of our
Officials and majority Political Leadership who will continue to
serve the people in a spirit of Solidarity, Freedom and Unity in

This then Mr Speaker concludes my overview of the 2008/9 and 2
outer years budget and accordingly propose the adoption of Items
621 and 622.

                            - oOo –


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