28 March 2017

Port Shepstone Civic Centre



Honourable Speaker,

Deputy Mayor,

Chief Whip,

Fellow Councillors,

Municipal Manager,

Heads of Departments and all other officials present,

Members of the media,

Ladies and Gentlemen,


Good Morning


Mr Speaker, we meet on this Tuesday morning to table the draft budget of the Ray Nkonyeni municipality. It is a culmination of a process which began several weeks ago, and which has seen the Municipal Manager and his top management team analyzing the state of the municipality’s finances, with a view to making realistic projections for the future. I am aware that it has been a cumbersome and time consuming process, but one that was absolutely necessary.


 Mr Speaker and honourable councilors, the budgeting process is the foundation of proper financial planning. We must remember that we are enjoined by the highest law in the country, our Constitution, in section 153 to structure and manage our administration and budgeting to give priority to the basic needs of the community, and to promote its social and economic development.


Bearing this in mind, the Municipal Finance Management Act was enacted primarily to promote sound financial management practices in order to lay a sound base for sustainable development, as well as to enable stakeholders to hold their government accountable. This piece of legislation requires as per section 16(2) that we table a credible budget at least 90 days before the start of a new financial year.


Mr Speaker, Ladies and Gentlemen, we table the draft budget on the backdrop of what economists have termed a promising economic outlook. The 2017 Budget Review has noted that GDP growth is forecasted to increase by 1,3 percent this year, and improve in the two outer years by 2 percent and 2,2 percent respectively. The forecast is supported by amongst others, stabilizing commodity prices, greater reliability of our electricity network, recovering business and consumer confidence, as well as improved labour relations.


We have however been warned that in as much as this marks a welcome shift from previous years of decline, it is still not high enough to make a significant dent on the triple challenge of inequality, poverty and unemployment. In other words, this means that even though our country may be in better economic shape, we must still remain prudent in our planning and budgeting because the positives being observed on the global and national stage have yet to translate into practical tangibles for many of our citizens.


If we come to the business at hand, the draft budget we table this morning has been informed by several principles; mainly:

·        The necessity for a credible budget based on realistic anticipated revenue;

·        The alignment of policies and our priorities

·        Limitation on non- priority spending

·        The separation of powers and functions

·        The consideration of the new General Valuation roll which comes into effect in the new financial year; as well as

·        The current inflation rate which stands at 6,4 percent


Mr Speaker and fellow honourable Councillors, the draft budget is differentiated into two categories; namely, the Operating and Capital Budget:









We project that the Operating Income budget will be R 830 million, seven thousand five hundred and twenty four rand for the year 2017/2018, which will comprise of the following;

ü Equitable share of R175 million five hundred and sixty six thousand as per Division of Revenue Act

ü Rates revenue of R385 million fifty seven thousand nine hundred and five rand and forty one cents, based on the anticipated new valuation roll

ü An increase of six percent for refuse and other tariffs, with the exception of electricity. With respect to electricity increase, National Treasury has advised via MFMA Budget Circular No. 86 that the Minister of Finance has granted an extension until 05 April 2017 for the tabling of bulk increases for municipalities in respect of electricity for 2017/2018. In the meantime municipalities have been advised to budget for a bulk increase of 0, 31 percent as per current guideline by NERSA. When the final determination is made, municipalities will be expected to adjust their figures accordingly.


The Operating Expenditure is comprised of;

ü Salaries and allowances, which are budgeted at 6 percent for councilors, and CPIX plus 1 percent for officials as per wage agreement. The municipality’s salary bill represents 39, 05 percent of the operating budget

ü General expenses, which have increased to R501million six hundred and twelve thousand six hundred and thirty rand, or 59, 9 percent of the operating budget

ü Repairs and maintenance costs which decrease by 22 percent to R43 million four hundred and ninety five thousand five hundred and sixty six rand


Other items on the Operating Expenditure budget include:

Ø A grant of R1, 7 million to Ugu South Coast tourism

Ø A grant of R 1 million to South Coast Development Agency as our contribution to this regional body

Ø Youth empowerment programs at an allocation of R1, 5 million

Ø An allocation of R1 million for Poverty Alleviation interventions

Ø Funding of R750 000 for the hugely successful South African Women’s Golf tournament

Ø Provision of R750 000 towards registration fees for needy and academically deserving tertiary students

Ø Funding for the inaugural South Coast Bike Festival to the tune of R500 000

Ø A contribution of R500 000 towards the annual Ugu Jazz Festival

Ø A total of R1 million 180 thousand towards the support and empowerment of vulnerable sectors of the society such as women, children, senior citizens, indigent learners, and people living with HIV and AIDS





Our Capital budget Mr Speaker and honourable councillors, is financed through grants such MIG, Housing Grant, Provincial Treasury (on Technology Hub), Department of Transport (Intermodal Facility), other grants as well as internal funding. It comprises of both capital projects for the community as well as departmental capital items.


Our draft Capital Budget for 2017/2018 is projected at R132 million 788 thousand 185 rand, and seeks to deliver on basic needs for our people, whilst mindful of our resolve to remain vigilant to avoid over- budgeting.


The breakdown of the proposed Capital Budget is as follows:


MIG Funding – R 59, 9 million

Housing Grant – R20, 6 million

Provincial Treasury (Technology Hub) – R15 million

Department of Transport (Intermodal Facility) – R4 million

Other Grants (DME, MHOA, etc.) – R19, 4 million

Internal Funding – R10, 6 million



The further breakdown of the capital budget Mr Speaker, Ladies and Gentlemen, is as follows:


Cluster 1 (Wards 30 to 36)

R10 million, eight hundred thousand rand


Cluster 2 (Wards 7, 8, 9 and 29)

R7 million


Cluster 3 (Wards 1, 2, 6, 10, 11 and 19)

R6 million


Cluster 4 (Wards 3, 5, 25, 26, 27 and 28)

R28 million twenty thousand, five hundred and twenty two rand


Cluster 5 (Wards 21 to 24)

R5 million eight hundred and sixty two thousand, three hundred and fifty rand


Cluster 6 (Wards 4, 17, 18, and 20)

R30 million, five hundred and fifty five thousand, three hundred and thirteen rand


Cluster 7 (Wards 12 to 16)

R6 million, nine hundred thousand rand


Municipal Wide Projects

R34 million, two hundred and sixty five thousand rand


Departmental Capital Budget

R3 million, three hundred and eighty five thousand rand


Councillors will have the details of the actual projects as per the above allocation, and which will be incorporated in official documentation to be made available to the public.


In total Mr Speaker, the proposed draft budget for 2017/2018 stands at R1 billion, twenty seven million, five hundred and twelve thousand, eight hundred and twenty nine rand.


Mr Speaker this draft budget attempts to meet our political and moral obligation to improve the situation of the most marginalized by providing quality services. It also seeks to develop a credible instrument which meets the objectives of the MFMA by:

·        prioritizing basic needs

·        ensuring alignment with the IDP

·        ensuring that line items are funded

·        providing for tariff increases which are fair and sustainable

·        projecting revenue inflows in a realistic manner, and

·         making adequate provision for maintenance and renewal of existing infrastructure


As is normal practice, should Council resolve to approve the proposed budget, we will then embark on a process of consultation with communities and other organized formations so that by the time we approve the final product, it is indeed a legitimate document which meets the highest standard of scrutiny.


As I conclude I wish to urge all of us who were elected by the people to double our efforts at oversight of the budget, as well as ensure that we constantly report progress to the people who have entrusted us with their votes. At our level of influence, it is important that we do everything within our means to ensure that our government’s program of radical transformation is implemented with the urgency that it deserves.


It is correct that I leave you with some inspiration from one of the most distinguished leaders of our time; Oliver Reginald Tambo who is this year being celebrated, precisely for his astute leadership, and I quote “the fight for freedom must go on until it is won, and our country is free and happy and peaceful as part of the community of man. We cannot rest.”  (close quote). Indeed we cannot rest until all the freedoms contained in the Freedom Charter have come to pass.



And with those words, I sincerely thank you