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APRIL 2005

Mr. Speaker,
Deputy Mayor,
Fellow Councilors,
Heads of our administration,
Members of the public present today,
Distinguished guests,
Members of the media,
Comrades and friends:

I’m privileged to welcome you all at this special sitting of Council –the tabling of
2005/2006 Draft Budget Policy Statement.

This sitting of Council has been convened in accordance with Municipal Finance
Management Act: No 56 of 2003, Chapter 4, Section16 (2), which reads: in order for a
municipality to comply with subsection (1), the Mayor of the municipality must table the
annual budget at a Council meeting at least 90 days before the start of the budget year.

The MFMA further provides that the Mayor must “coordinate the process for preparing
the annual budget and for reviewing the municipality’s integrated development plan and
budget related policies to ensure that the tabled budget and any revisions of the
integrated development plan and budget-related policies are mutually consistent and

In line with this directive this municipality commenced with the process of compiling the
2005/2006 budget when it adopted the Budget Process Plan (BPP) at Council sitting in
September 2004. This was followed by and was in tandem with the sittings of the IDP
rep forum meetings where the review of the 2004/2005 IDP took place up until its
submission to the Department of Local Government and Traditional Affairs (DTLD) on 24
February 2005. Thus as I table the draft 2005/2006 Budget to Council today, Mr.
Speaker, I am able to confidently announce that the IDP and Budget related policies are
indeed “mutually consistent and credible” and every effort is being made to ensure
alignment between these two key policy instruments i.e. the IDP and the Budget.

Mr. Speaker, today’s sitting is not for purposes of approving the Budget and taking any
policy decisions for that matter regarding tariffs, rates and the like. It is merely to formally
table the draft Budget and set in motion a formal process of public participation. Bearing
this in mind, please allow me to just mention a few key considerations that inform this
draft budget around which it would be necessary to provoke and in fact receive
comments from the public that we serve.

The first relates to the operating budget.

The total operating budget that we are envisaging for 2005/2006 stands at R 255m and
the total anticipated income is also R 255m. The sources of revenue are split in
percentages as follows:

Electricity revenue would account for 47.19%, assessment rates 31.12%, refuse 5.27%,
grant funding 7.85% and other 8.57%.

It is instructive for me to mention that I have given strict instructions that salaries, wages
and allowances should be capped below 34% of the total operating budget.

The second consideration relates to the Capital Budget. I have already indicated that the
IDP is being used as a starting point. The revised IDP for 2005/2006 is also available for
public scrutiny ( and will remain so until approval of budget at end of May 2005) so that
all stakeholders can verify that indeed it is the basis and foundation of this draft
2005/2006 budget.

The total capital budget which we are envisaging for the 2005/206 budget stands at R
175m financed both internally ( approximately R10m) and externally through equitable
share allocations, a portion of the DBA Loan which is about R6 – 8 m for 2005/2006,
MIG funding and funding from the Departments of Housing and Minerals and Energy

In order to show further alignment with the IDP , Mr. Speaker, the Capital Budget is spilt
as follows as a percentage allocation or weighting per IDP imperatives:-

Provision of basic services receives a 70% share of our resources, improved service
delivery 4%, people development, primary health care including HIV/AIDS programmes
10%, poverty alleviation and unemployment 10%, community safety 6% and credit
control as well as capacity building is mainly funded through DPLG and DBSA grant
totaling in excess of R4m for both 2004/5 and 2005/6 financial years.

I think Mr. Speaker, it is also important for me to indicate how we are proposing to spend
or allocate equitable share which we are receiving for 2005/2006 in terms of the Division
of Revenue Act, DORA.

For free basic services, which include free basic electricity for the poorest of the poor,
we are proposing to allocate R 6.7 m. We are also proposing to use at least R6.2m for
further extension of basic services to the poor such as grass cutting, refuse removal,
maintenance of community halls and road maintenance, much along the lines of the
Expanded Public Works Programme ( EPWP), in a manner that creates employment
opportunities to our poorest sections of our local community. I would like those who
aspire to participate in this programme, especially our youth and women, to comment as
to how best we can structure it so that as many as possible benefit.

I need to say that, before I leave this subject, that when it comes to maintenance of our
rural roads network, in the consultations that have already taken place a strong need for
the purchasing of our own grader was expressed, therefore provision for this will be
made in the final budget.

I think finally, once again bearing in mind that we are not here to take any decisions, Mr.
Speaker, I simply need to provide the following indicators as to how we propose to deal
with the issues of tariffs and rates.

We are aware that the new Municipal Property Rates Act is coming into effect shortly
and that our rates policy will have to comply with it. We have thus long started a process

of preparing for the drafting of the rating policy which we will be phasing in once the Act
has been promulgated. This process will be consultative in a manner that allows all
interested parties to make inputs – I will provide details in this regard at the end of May
2005 as part of my Budget Speech.

With that as a background and for purposes of today’s business, the 2005/6 tariffs and
rates adjustments which we are proposing and putting out there in the public domain for
comments are as follows:

The proposed Rates adjustment is only 6%, the electricity tariffs adjustment is proposed
to be 5% and refuse also 6%.

A full text laying out the entire spectrum of tariffs charges, and rates will be published
together with the summary of the Budget in the local Newspapers from 4 of May 2005
and will be available at both the Ballito and KwaDukuza Offices from that date as well for
inspection and comments.

In the Budget Policy Statement that we table today, we have ensured that the budget as
required by law governing municipalities in the Republic is in line with the broad strategic
objectives of the IDP.

Accordingly, the larger portion of our budget will go on infrastructural development,
which is aimed at improving the quality of life of ordinary people. This Mr. Speaker is
consistent with our vision of building a people’s centered society.

It is my pleasure to table 2004/2005 Draft Budget before the sitting of Council and to
formally request you Mr. Speaker to convene a full meeting of Council no later than 31
May 2005 for purposes of debating and approving the 2005/2006 Budget. This will
indeed be preceded by a series of public engagements, I am intending to hold no less
than three Imbizos and IDP rep forum meetings to allow for structured inputs.

I thank you.

Issued by Department of Communications


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