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 Executive
Mayor’s Budget Speech – 2009
When my predecessor presented the draft budget in March this
year, she alluded to the troubles facing our country as a
whole and specifically our municipality. Since then we have
seen a worsening of the economic situation. Just yesterday
it was announced that South Africa is officially in a
recession and that the economy shrank by 6,7% in the last
quarter. Consumer spending has again dropped and obviously
this means that companies are now producing fewer goods.
These companies are either retrenching workers or they are
opting to work fewer hours.
Just yesterday we saw members of NUMSA protesting outside of
the Reserve Bank. They were demanding a drastic decrease in
interest rates as they fear further job losses and hardships
for workers who stand to lose their homes in the coming
months. Fortunately the monetary policy committee responded
positively today by decreasing interest rates with 100 basis
points but many believe that this is too little too late.
A municipality such as Midvaal is heavily reliant on income
generated from the sale of water and electricity to large
industries. When such industries consume less then we
obviously see a decline in our revenue which in turn forces
us to adjust our expenditure. Ordinary residents are also
consuming less or, are simply unable to pay their municipal
accounts, and this places even more strain on our resources.
Fortunately Midvaal’s administrative and political
management foresaw this situation way back in January when
we were preparing the 2008/2009 revised budget. Our response
was to immediately freeze all vacant staff positions that
were not required for essential service delivery. We also
issued guidelines to all departments on how expenditure
patterns would have to change in order to adjust to the
declining income. The Municipal Manager, CFO and MMC for
Support Services actively manage our day-to-day cash flow
and inspect all requisitions thoroughly before they are
approved. I too receive almost daily reports on our bank
balance, as well as current and future commitments and am
often faced with making some very difficult political
decisions. Financial, and specifically cash management, in
Midvaal is now our daily priority as we cannot allow a
situation to unfold where we do not have enough cash in the
bank to pay salaries and bulk purchases such as water and
electricity.
Mr Speaker, whilst all is not well in our country’s economic
outlook there is much hope in Midvaal. By accurately
predicting this situation some months ago we had the
convictions to take tough decisions that would lessen the
negative impact. Furthermore, the strict financial
discipline and prudence practiced over the past eight years
also played a major role in assuring our soft landing in
times when many municipalities are crashing.
About two weeks ago the ever present frown on my face
suddenly changed to a smile when I realized that Midvaal is
busy turning the situation around and that our outlook is
indeed a positive one. The payment rate for last month was
109% and our overall payment rate for the year to date is
now 92%. This is indeed much higher than the 70’s and 80’s
that we are hearing from our neighbours. Furthermore, our
active cash management strategy has ensured that we will not
have to employ unnecessary delaying tactics in paying our
suppliers and our biggest assets, namely our employees, will
not have to worry about whether they will be paid at the end
of the month. I came to realize that predictions had come
true, namely that those organizations that have the
determination and outright guts to take difficult decisions
early on in this crisis will also be the first ones to see a
recovery.
Mr Speaker, it is with this background that I present the
2009/2010 budget. The operational budget totals just less
than R400 million. Income is based on a conservative payment
rate of 95% and a very prudent provision of R18 million as
income foregone. The salary budget totals R114 million or
32.5% of total expenditure (after accounting adjustments)
and this is well within the required norms.
There is no doubt that the proposed expenditure will require
us to continue taking difficult decisions and acting
conservatively as there may be a need to suspend certain
projects that are not focused on visible service delivery.
However, Midvaal’s residents can rest assured that no
service will deteriorate to unacceptable levels in the
coming year. Our residents are used to the best in service
delivery and we are committed to ensuring that they continue
to receive value for money.
Our tariff increases have remained within current
inflationary levels and overall increases, excluding water
and electricity, are around 9%. However it must be noted
that we are subject to the very concerning increases being
proposed by Rand Water and Eskom. Water tariffs will
increase by 16% and electricity by 31%. It must be noted Mr
Speaker that Midvaal will not follow the route taken by many
other Council’s who increased their electricity tariffs by
as much as 50% to raise extra funds for the municipality
while trying to blame it on Eskom. We will only increase our
tariffs by the percentage that is being proposed by NERSA as
we understand that this increase will have a severe impact
on our local economy and we will not use the opportunity to
place further strain on our ratepayers.
After the Ekhuruleni Metropolitan Municipality acknowledged
that it would write off the R36 million owed by Midvaal in
terms of the former EGSC’s distribution account it was
decided that Midvaal was in a position to take up a further
loan of R40 million. Subsequently this Council approved the
principle of a further loan at its Special Meeting on 7 May
2009. Whilst the public participation process for the loan
still needs to be completed, we have proven that Midvaal can
comfortably accommodate the repayments by providing for them
in the proposed budget.
Considering the 19,2 million unspent funds from our existing
loan and the proposed additional R40 million loan I am
excited to list numerous much needed capital projects as
determined by our IDP. These projects appear in the proposed
capital budgets of 2009/2010 as well as the final
adjustments budget of 2008/2009:
Own funds and loans:
n Meyerton CBD
upgrade – R7 850 000
n Riversdal
Electrical Substation – R6 100 000
n Three Rivers
Electrical Substation (a joint initiative with Emfuleni) –
R7 500 000
n Telemetry
System to address water losses and sewerage spillages – R3
350 000
n Completion
of the Vaal Marina Reservoir – R2 800 000
n Gravel To
Tar Programme – R11 100 000
n Tedderfield
Water Project – R6 000 000
n Upgrading of
Tarred Roads – R12 500 000
n Upgrading of
Sewerage Pump Stations – R1 500 000
n Upgrade of
Water Network in Daleside Industrial – R2 000 000
n Eisenhower
Bridge Upgrade – R1 000 000
n Municipal
Infrastructure Grants (MIG) & other government grants:
n Gravel to
Tar Programme mainly in Sicelo and Lakeside – R9 900 000
n Sewer
Network Extensions – R5 000 000
n Interim
Upgrade of the Meyerton Purification Works – R5 200 000
n Upgrade of
Bantu Bonke Sewerage Network – R1 400 000
n Installation
of Water Meters in Lakeside Ext 1 – R1 400 000
n Construction
of the Sicelo Multi Purpose Centre – R1 000 000
n Construction
of the Bantu Bonke Multi Purpose Centre – R1 200 000
n Regional
Landfill Site Feasibility Study – R1 000 000
n New Landfill
Site (Purchase of land) – R2 000 000
n Extension of
Meyerton Cemetery – R1 500 000
n Equipment
upgrades at Libraries – R1 500 000
Mr Speaker, as the Councillors can see, despite the tough
economic times ahead we are proposing a realistic but
exciting budget which will address numerous service
backlogs. Midvaal has always been at the forefront of
economic development and our maintenance and capital plans
will ensure that we are prepared to attract our fair share
of investment once the economy begins to recover.
Preparing a municipal budget at the best of times is an
enormous challenge, but in this tough economic situation
this process certainly requires us to think out of the box.
I want to thank all the officials and councilors who spent
many hours preparing this fine document. I also want to
thank our community for their comments and suggestions made
during the public participation process. Whilst we cannot
address every need overnight, I do believe that this budget
will go a long way in improving the lives of our residents
and the environment within which our businesses function.
Over the past eight years Midvaal has always set the pace
and indeed the example of successful and accountable local
government and I am looking forward to the continuation of
this during the 2010/2011 financial year.
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ANNUAL REPORT
2008/2009 DRAFT
2007/2008
If you have a fast broadband internet
connection, you may download the entire Annual Report (50MB
file)
here...
If you have a slower internet connection, you can download
the annual report in separate files less than 10MB each:
Midvaal local
municipality annual report 2007-08 bl 1-20.pdf -
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Midvaal local municipality annual report 2007-08 bl
21-40.pdf -
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Midvaal local municipality annual report 2007-08 bl
41-60.pdf -
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Midvaal local municipality annual report 2007-08 bl
61-80.pdf -
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Midvaal local municipality annual report 2007-08 bl
81-100.pdf -
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Midvaal local municipality annual report 2007-08 bl
101-120.pdf -
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Midvaal local municipality annual report 2007-08 bl
121-140.pdf -
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Midvaal local municipality annual report 2007-08 bl
141-160.pdf -
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Midvaal local municipality annual report 2007-08 bl
161-180.pdf -
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Midvaal local municipality annual report 2007-08 bl
181-200.pdf -
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LONG TERM BORROWING CONTRACTS
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INSTITUTION |
TYPE |
AMOUNT |
PERIOD |
INTEREST RATE |
ADDITIONAL COMMENTS
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INCA |
Capital Financing Loan |
R2,3 mil |
01/09/2006 - 30/09/2013 |
11,18 % |
Interest rate depending on extent of facility taken up |
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DBSA |
Capital Financing Loan |
R40 mil |
14/08/2009 - 14/08/2039 |
11.39 % |
Interest rate depending on extent of facility taken up |
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DBSA |
Capital Financing Loan |
R70 mil |
14/05/2008 - 30/06/2023 |
10,63 % |
Interest rate depending on extent of facility taken up |
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DBSA |
Capital Financing Loan |
R39,82 mil |
30/03/2005 - 15/02/2015 |
9 - 9.5 % |
Interest rate depending on extent of facility taken up |
INCA LOAN SCHEDULE -
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