Executive Mayor of Drakenstein Municipality, Conrad Poole, tabled the budget at the Municipal Council meeting on Monday, 30 May 2022.
Below is the full Speech, or you can watch it here:
Good afternoon ladies and gentlemen,
Speaker, it is a privilege to deliver my budget speech for the new elected term post the local government elections held in November 2021.
The resilience of Drakenstein Municipality is tested and affirmed continuously. The downturn in the economy that was prevalent before the outbreak of the COVID-19 pandemic, the lockdown regulations that limited economic activity and the conflict between Russia and Ukraine are just some of the factors that are causing inflation and interest rate hikes. Locally it is mostly felt with the sharp increase in fuel, cooking oil and wheat prices. The national fiscus is shrinking due to increased government debt, resulting in a reduction in national and provincial grants. In these trying times I urge the political leadership, senior management and staff of Drakenstein to continue working as a unit to ensure excellent service delivery.
In my new term of office and in the interest of good governance I thought it well to establish a new portfolio: Governance and Compliance. The allocated MMC (Member of the Mayoral Committee) will do oversight of governance and compliance activities, therefore supporting administrative effectiveness on a strategic level. This oversight is specifically in relation to Internal Audit, IDP (Integrated Development Plan), Performance Management and Risk Management.
To further enhance good governance, communication and service delivery, a renewed focus will be placed on the role and responsibility of ward councillors. I will therefore introduce performance contracts for ward councillors, which will monitor and evaluate their functions as ward representatives. Furthermore, a revised management model was introduced and distributed to all councillors, clarifying the roles and responsibilities of the Mayoral Committee Members, ward councillors and ward committees on the interaction with the community and administration.
2021/2022 BUDGET HIGHLIGHTS AND ACHIEVEMENTS
Speaker, my election manifesto reaffirms that all achievements and successes of the past five years are to be sustained and improved. It also included the following three key focus areas: Good governance and financial management, service delivery and growth and development.
One of our most recent and noteworthy achievements is the Green Drop Certificate Award. The National Green Drop assessment evaluates the state and management of wastewater treatment. Drakenstein is the largest municipality of the top three performing municipalities in the 2021 National Green Drop Assessment.
Let us now reflect on some of the highlights of the past financial year.
1. AUDITOR-GENERAL OPINIONS
Speaker, Drakenstein Municipality for the 2020/2021 financial year received a 14th consecutive unqualified audit opinion from the Auditor-General. It was also the seventh clean audit opinion that we received. As Executive Mayor, I am proud of these achievements and I would like to thank the Deputy Executive Mayor, MMCs, Councillors, the City Manager, CFO, Executive Directors and all staff for their contributions in achieving these outstanding results.
2. RENEWABLE ENERGY
Drakenstein was selected as one of four municipalities in the Western Cape to explore the feasibility of renewable energy as part of the Western Cape Government’s Energy Resilience Programme. A report in this regard was tabled at Council recently.
3. FINANCIAL RATIOS
Key financial ratio achievements include staff cost at 27.9% of the total operating budget whilst the industry norm is between 25 and 40%; water losses is 15.40% whilst the industry norm is between 15 to 30% and electricity losses is at 7.54% whilst the industry norm is between 7 to 10%.
4. PROJECT HIGHLIGHTS AND ACHIEVEMENTS
Furthermore, various other commitments were made to the community and I would like to focus on some of the highlights and achievements:
4.1 Budget allocations for the Vlakkeland Housing Project to date have contributed to the servicing of 942 sites and the construction of 331 houses since implementation of the project;
4.2 The construction of basic infrastructure services at Schoongezicht with an estimated cost of R14.8 million;
4.3 The construction of basic services in the informal settlements at a cost of R5 million;
- An estimated R18.6 million was spent on the upgrade of water and wastewater systems at Paarl and Wellington;
4.5 The capacity at the Dalweiding substation and Vlakkeland switching station were increased in order to supply the new Vlakkeland housing development at an estimated cost of R6.4 million;
4.6 Upgrading and resealing of roads across Drakenstein at an estimated cost of R7.9 million;
4.7 Upgrading of sidewalks, at a cost of R2.5 million;
4.8 The Oosbosch class 3 dual carriageway project from the Berg River Boulevard to the R301 was completed with a 20% contribution from the Municipality out of the total cost of R196 million over the past three financial years. This project was largely funded by the Western Cape Government as it is classified as a provincial road;
4.9 Construction of the traffic light and upgrade of the intersection at Wellington Industrial Park on the R44 at a cost of R3 million has brought huge relief to all road users and minimised the risk of road accidents;
4.10 The upgrading of the R44 by the Provincial Government at a cost of R3.8 million;
4.11 The construction and upgrading of sport facilities at Pelikaan Park, Fairyland, New Orleans, Boy Louw, Dal Josaphat Sports Stadium, Huguenot Tennis Club and De Kraal at a cost of R8.5 million. These upgrades and construction are part of multi-year phases to continuously enhance the standard of our facilities;
4.12 Pentz Street and Antoniesvlei swimming pools were upgraded at an estimated cost of R2 million. The upgrades entail extending the lifespan of our swimming pools and enhancing the standard and quality of our facilities for the public;
4.13 Parks and playgrounds were upgraded at an estimated cost of R1.8 million;
4.14 A special project to revitalise the Arboretum and to create a Climate Park was implemented to the amount of R3.5 million through the partnership with Neumarkt Municipality in Germany;
4.15 An amount of R3 million was spent on the construction of aprons around housing rental stock; and
4.16 An estimated R1 million was spent on the “Paint my Story” project, which entailed the repainting of rental stock and providing jobs for 21 community members.
PUBLIC PARTICIPATION PROCESS
The draft IDP, draft budget, draft budget-related policies and the draft tariffs were tabled at Council on 30 March 2022.
Speaker, for the second year, the Municipality embarked on a series of Open Days, which took on the format of interactive discussions where communities could directly engage with Ward Councillors and municipal departments to raise concerns and give input on the draft budget, draft IDP and draft Spatial Development Framework (SDF). The 33 wards were clustered into 14 open day sessions over a period of three weeks from 6 to 26 April 2022.
In addition, the draft budget and IDP were also advertised on all our online platforms for the community to provide input electronically or in writing. These comments are included in the Budget item. In terms of communication, the communities were notified of these engagements through newspaper advertisements, distribution of pamphlets, radio talks, loud hailing, Facebook, municipal website, SMS communication and ward councillors.
COMMENTS RECEIVED FROM THE PUBLIC
Nine written comments were received on the draft budget which includes the Provincial IDP and Budgeting Assessment Report. Detailed feedback to the comments is attached to the budget item as Annexure A.
Speaker, the majority of the comments received were on the proposed tariff increases. This will be comprehensively dealt with when I discuss the new tariffs.
ECONOMIC AND FINANCIAL OVERVIEW
The South African economy is currently in distress and the Real GDP growth is expected to moderate to 1.7% in 2024.
It is therefore important to note that, even with the slow economic growth mentioned, Drakenstein Municipality is performing exceptionally well. The continued focus on revenue enhancement and protection as well as cost containment initiatives are yielding positive results. The improved financial and sustainability ratios are reported in the MFMA monthly Section 71 Report and confirmed by INCA with the latest report on the Municipality’s long-term financial projections.
One of the key revenue enhancement initiatives was a renewed focus on development and investment in Drakenstein. During the 2021/2022 financial year 2 933 new residential opportunities, 38 200 square meters of new commercial development and 31 962 square meters of new industrial development were granted land use development rights.
Over and above the aforementioned, land use rights applications for 317 new residential opportunities and 17 346 square meters of new commercial land are currently being processed.
A total of 1 438 building plan approvals were granted for the period from 1 July 2021 to date. The total value of the approved building plans is approximately R2.3 billion.
The approvals granted consist of:
- 1 269 Residential building plans to the value of R1.79 billion;
- 78 Commercial building plans to the value R404 million;
- 38 Agricultural building plans to the value R53.7 million;
- 29 Industrial building plans to the value R52.4 million; and
- The remaining 24 building plans representing a variety of other uses such as institutional uses and minor building works to the value of R20 million.
These developments are evident in the growth of the valuation roll where the 2017/2018 Valuation Roll as implemented had a total property value of R55.9 billion. The 2021/2022 Valuation Roll as implemented represents a total property value of R71.7 billion. The aforementioned equates to R15.8 billion which includes new developments and growth in property value.
This impact can also be seen in the growth of revenue received from services such as refuse and sanitation. Growth in the business and commercial sectors is creating much needed employment opportunities for the community. A total of 462 new job opportunities were created to date and it is envisaged that a total of 2 661 new job opportunities will be created.
A fresh outlook on tourism to attract families and businesses alike are also one of the strategies implemented to stimulate the growth in the local economy. In adapting to the changing environment and current trends the focus in tourism has shifted to the digital market. In addition to supporting the wine tourism industry, we broadened our spectrum to focus on sport and adventure tourism which is unique to Drakenstein.
CAPITAL AND OPERATING BUDGET 2022/2023
Speaker, the total proposed budget for the 2022/2023 financial year amounts to R3 billion, comprising of a R2.87 billion operating and R130.6 million capital budget. To fund the capital projects, we recommend not to take up new external loans over the next two years. This will ensure that our current gearing ratio decreases to an estimated 53.8% in 2022/2023 and to an estimated 41.7% in the 2024/2025 financial year below the national norm of 45%.
I will summarise the budget in terms of the following categories:
- Expanded Public Works Programme (EPWP);
- Human Settlements;
- Water and Sanitation;
- Waste Management;
- Roads and Storm Water;
- Sport Facilities, Parks and Cemeteries;
- Tourism and Economic Development;
- General Community Projects;
- Ward Committee Support;
- New Initiatives and Special Projects; and
- Financial Assistance to the Poor.
EXPANDED PUBLIC WORKS PROGRAMME (EPWP)
Speaker, it is important for us to facilitate the creation of job opportunities and recruitment in a fair and transparent manner. In this regard the EPWP policy and procedures to increase control over recruitment, selection and contract administration were implemented.
The EPWP for 2022/2023 makes provision for approximately 1 118 job opportunities at an estimated cost of R19.7 million. The National Department of Transport and Public Works EPWP Grant contributes R4.1 million whilst Drakenstein contributes R15.6 million. The programme will focus on the following projects:
- Solid Waste, refuse removal and cleaning projects;
- Community facilities such as public toilets, swimming pools and sport fields, cemeteries, community buildings, resorts, libraries, parks and grass cutting;
- Public safety projects like peace officers, security guards and firefighter training;
- Cleaning and maintenance of stormwater systems and catch pits, pump stations, electrical substations and general buildings;
- Artisan training in the mechanical workshop;
- Informal settlement plumbing and cleaning of toilets;
- Maintenance of rental stock; and
- Demolition of illegal structures.
The roll-out of ward projects will ensure that a further 630 work opportunities could be created in solid waste cleaning and parks maintenance projects in wards.
Speaker, housing is a National and Provincial Government competence. National housing legislation prescribes that a municipality must perform this function on behalf of National Government with financial assistance from the national fiscus.
In this regard, a grant allocation of R47 million was awarded to the Municipality for the 2022/2023 financial year which will be used to service sites in Fairyland, Siyahlala, Carterville and complete the planning for Mbekweni Erf 557, Saron, Paarl East and Simondium.
In addition to the aforementioned, an amount of R57 million will be spent directly by the Provincial Government on the Vlakkeland Housing Project for the 2022/2023 financial year which will assist in building 216 new houses.
During the new financial year, we will also focus on the following projects:
- Improving the access to basic services at a cost of R3.2 million;
- Providing basic services at the Schoongezicht Emergency Housing Project at an estimated cost of R10.8 million; and
- Maintenance of aged municipal rental stock. Some of our rental stock has also been structurally damaged by fires. An amount of R3 million has been provided for the maintenance of the rental stock.
WATER AND SANITATION
Basic services that Drakenstein must provide, are clean drinking water and sanitation. We are budgeting R31.6 million for these services and will include the following:
- Further refurbishment of Pentz Street Pump Station – R5.6 million;
- Replacement of water networks – R5 million;
- Upgrade of bulk water pipe system at Drommedaris Street – R5 million;
- Upgrade and replacement of basic services – R2 million;
- Replacement of equipment for Water & Sanitation Services – R 6 million;
- Replacement of mechanical inlet screens – R2.9 million; and
- Replacement of sewage networks – R5 million.
The 2022/2023 budget makes provision for R29.9 million to cater inter alia for the following electricity infrastructure projects:
- Replace old equipment – R3 million;
- Increase existing Medium Tension network capacity – R1.8 million;
- Increase existing Low Tension network capacity – R1.8 million;
- Increase existing High Tension network capacity – R2 million;
- Bulk electricity upgrade to the Vlakkeland Housing Project – R8.6 million;
- Palmiet substation, transformer 3 refurbish – R6 million;
- Vandalism and theft to infrastructure – R3 million; and
- Electrical Infrastructure upgrade Programme, which will include the electrification of informal settlements – R1 million.
Cable theft remains a big problem which necessitated the establishment of a dedicated Cable Theft Prevention Task Team. Financial losses suffered in the current year due to vandalism and theft are in excess of R6 million.
Speaker, waste management is a major challenge in Drakenstein, the district and the province. We have identified 35 illegal dumping hotspots and various initiatives were implemented in this financial year to reduce illegal dumping, which included:
- A pilot project, placing skips at 10 hotspot areas which are cleaned on a regular basis;
- Three further mini drop-offs were constructed to provide waste disposal alternatives;
- The “Aunty Dinah” project was launched by appointing supervisors to keep the identified hotspots clean with the support of EPWP workers and the municipal collection services; and
- The War on Waste (WoW) programme is an ongoing initiative, utilising EPWP workers to clean specific problem areas on a scheduled basis.
The following provision has been made for waste management projects in the 2022/2023 financial year:
1. R500 000 for purchasing street refuse bins to combat littering;
2. R650 000 for the construction of mini drop-off facilities in high-density and informal areas to provide a disposal facility in communities;
3. R4.5 million for the construction of organic waste diversion infrastructure to comply with new waste legislation; and
4. R2 million for the purchasing of International Organisation for Standardisation containers to transport waste between the Paarl Refuse Transfer Station and disposal facilities.
ROADS AND STORMWATER
Speaker, a well-developed and maintained integrated road network, providing for mobility of all transport sectors, in support of integrated urban planning, economic growth and sustainable development is of utmost importance.
Therefore, the maintenance of roads and stormwater infrastructure is highly rated and we provided R16.5 million for the 2022/2023 financial year for these projects. The main projects catered for are the following:
- The resealing of roads;
- The upgrading of the stormwater system;
- The tarring of sidewalks; and
- The upgrading of traffic signals and provision of UPS systems.
The Western Cape Department of Transport project for the upgrading of Main Road 201 to a dual carriageway between the N1 and the Kliprug Road will commence during May of 2022. To this end, we will provide R20 million in the 2022/2023 financial year to the total cost of R196 million of the project. The majority of the funding will be provided by the Provincial Government.
SPORT FACILITIES, PARKS AND CEMETERIES
Speaker, the infrastructure for sport, parks and cemeteries are also important focus areas in our IDP and we provided R9.4 million for the 2022/2023 financial year. Special focus will be placed on the phased development of De Kraal as a turnkey project. Phase 3 will commence in the 2022/2023 financial year with the construction of ablution facilities, change rooms and the connection of services.
The main capital projects include:
- The upgrading and construction of swimming pools and sport infrastructure – R6.2 million; and
- Investing in much needed small plant tools and equipment to ensure maintenance can be done more effectively – R3 million.
TOURISM AND ECONOMIC DEVELOPMENT
Speaker, one of our key performance areas (KPAs) is to promote and facilitate economic development and tourism. The development of the De Poort site has been identified as a key project to enhance tourism and economic activity. The aim is to develop De Poort into an integrated and multifunctional space that serves mainly as the tourism gateway to Paarl and the Drakenstein area. A call for proposals will be advertised during the first quarter of the new financial year for implementation of Phase 1 of the project to commence in 2022.
GENERAL COMMUNITY PROJECTS
Speaker, general projects, programmes and initiatives that we will support to improve service delivery and the living conditions of our community in the next financial year are:
- Upgrading of soup kitchens – R500 000 to ensure that the buildings are effectively equipped;
- Air quality monitoring equipment – R500 000 to ensure that air quality can be measured and reported where applicable;
- Purchasing vehicles and equipment – R4.2 million; and
- Investing in information technology infrastructure – R4.1 million.
WARD COMMITTEE SUPPORT
Speaker, to ensure visible change and a larger impact in wards through ward projects, it was decided that ward allocations will be structured according to themes and consist of the following projects:
- Clean and Green Project;
- Support projects (NGOs, Schools, Elderly and Sport);
- Safety Project;
- Skills development; and
- Community projects.
Each ward committee member also receives a quarterly stipend of R750 for assisting the ward councillor in the ward.
NEW INITIATIVES AND SPECIAL PROJECTS
1. Municipal Court
On 30 March 2022, the Minister of Justice proclaimed our facility at 60 Breda Street as a Municipal Court. A magistrate will be appointed by the Chief Magistrate and the Department of Justice in due course and we aim to be operational in the first quarter of 2022/2023. The new court will underline the seriousness of bylaw contraventions and assist the Municipality in enforcing law and order in all earnest.
2. Public Safety
The Drakenstein Smart Safety Network (DSSN) is a partnership between Drakenstein Municipality, the Provincial Department of Community Safety, the South African Police Service (SAPS), community-based safety organisations (neighbourhood and farm watches) and the private sector (security companies). The DSSN provides a platform to work together and share information on safety and security incidents and threats in real time, using cutting-edge technology.
During the first two phases of the project, capital spending of R2.4 million was invested, which included the renovation of the central control room and expansion of smart technology.
Phase 3 will focus on additional technology and communication equipment with safety partners. It will include the installation of CCTV cameras, security beams, alarms, security lights and license plate recognition (LPR) cameras at a cost of approximately R1.3 Million.
We have over 40 CCTV and LPR cameras, monitoring all entrances to our city and providing valuable information to our municipal control room at 60 Breda Street in Paarl.
I would like to recognise the contribution made by the following safety partners: Paarl Business Watch, Drakenstein Farm Watch, SAPS, Wellington and Paarl East Community Policing Forums, and all neighbourhood watches. We will provide additional support to all neighbourhood watches and have availed R660 000 in this regard.
Traffic Services also forms an integral part of law enforcement. Speaker and Councillors, I am proud to announce that we have introduced an electronic motor vehicle registration system. Motor vehicle licenses can now be renewed from the comfort of your own home. The official opening of the electronic learner licensing testing centre in Wellington, was on the 1st of June 2021. This is the first initiative of its kind in the Western Cape. The Traffic Department also decentralised its motor vehicle licensing and registration to the Wellington Customer Care Centre for ease of business.
3. Social Development
3.1 Gender-Based Violence and 16 Days of Activism
Drakenstein Municipality declared war against Gender-Based Violence against Women and Children in our Society. We strongly believe that the focus on Gender-Based Violence must be 365 days throughout the year and not just a once-off campaign.
3.2 Street People
The management of street people within the municipal area is a complex space and needs a holistic approach to manage it effectively. The Municipality, in collaboration with the Department of Social Development, is in process of finalising a Memorandum of Understanding to establish and manage overnight shelters in Wellington and Paarl. We firmly believe that this initiative will assist us in a structured way to restore dignity to the homeless in Drakenstein.
- Early Childhood Development Centres (ECDCs)
Speaker, our children are the future of tomorrow. Currently we support 132 registered Early Childhood Development Centres (ECDCs) covering our municipal area from Simondium to Saron.
FINANCIAL ASSISTANCE TO THE POOR
Speaker, Drakenstein has 17 292 indigent households on its database. We continue to assist our vulnerable households, in line with our Indigent Support Policy. In an ongoing effort to assist the most vulnerable it must be mentioned that Drakenstein’s indigent support is in excess of the national norm by almost three times compared to our neighbouring municipalities.
The Indigent Support Policy makes provision for the following benefits:
- 6 Kilolitres free water every month;
- 85 Electricity units (Category A and B consumers) and 50 units (Category C & D consumers) every month plus basic charges only up to 30Amp single phase prepaid or conventional electricity meter;
- Refuse removal charges (once a week for one refuse bin);
- Sewerage charge levy for 1 toilet plus basic charges for erf size up to 550 square meters every month;
- Assessment rates charge on valuation limited to R750 000 per erf; and
- Municipal rentals rebate equivalent to the maximum amount of the total basket of free basic services.
Furthermore, the current vetting process to verify which registered indigent households still qualify for the Municipality’s indigent subsidy will be done six monthly instead of annually to ensure that only verified vulnerable residents receive assistance.
1. Online Meter Readings
Consumers can now log their water meter readings online on the municipal website. This initiative will assist with the accuracy of billing.
2. Fixing Water Leaks at Indigent Households
Indigent consumers who are struggling with water leaks that could lead to high bills and wastage of this precious resource can soon breathe a bit easier. The Municipality appointed a plumbing service to repair these leaks, to ensure that consumers’ outstanding debt does not escalate further and to save water. For the period June 2021 to May 2022, a total of 313 water leaks were repaired at a total cost of approximately R720 000.
3. Renewable Energy
In April this year, Council resolved that tenders will be issued to solicit proposals from Independent Power Producers to generate and supply alternative energy to Drakenstein Municipality. The alternative energy will then improve the stability of electricity supply to our consumers. The Municipality identified five potential alternative energy projects (through wind and solar generation) which has a total of 135MW supply which can become part of the Municipality’s alternative energy supply and decrease the disruptive impact of the continued load shedding. The Municipality also applied for grant funding to install solar panels on municipal buildings as an alternative energy supply.
INTEGRATED URBAN DEVELOPMENT GRANT (IUDG)
Drakenstein Municipality, being a secondary city, was identified by COGTA to participate in the IUDG programme, based on its excellent historical performance and track record on the Municipal Infrastructure Grant (MIG) programme.
The IUDG allocation for the 2022/2023 financial year is R62 million. On the old MIG programme, the allocation would only have been R39 million.
Speaker, I want to provide Council the assurance that robust internal and external financial discussions took place and benchmarking exercises with neighbouring municipalities to ensure that we implement fair and affordable tariffs.
Before I deal with tariffs, it is important to understand our proposed tariffs in the context of the normal (CPI) and municipal inflation rates. Currently, the normal inflation rate (CPI) is 5.9% and all projections point towards a possible increase of up to 8% by the end of this calendar year.
Municipal inflation is affected by factors such as the cost of electricity, fuel, material, equipment, etcetera. For example, the cost increase of electricity is 8.61%, petrol and diesel increased respectively by 27.7% and 54.1%. The estimated municipal inflation rate is between 10 and 15%.
Against this background and despite expected high normal and municipal inflation rates, the proposed tariff increases for the financial year 2022/2023, are as follows:
- Water and Sanitation – 6.9%;
- Refuse removal – 7.5%;
- Property Rates – 0%; and
- Electricity – 7.47%.
Speaker, it is important to note that Provincial Treasury after assessing our draft budget, was not in favour of the 0% increase in property rates. However, we believe that it is in the best interest of our ratepayers. In addition, the special rebate for retired persons has been lowered from seventy to sixty years of age subject to qualifying criteria.
Eskom applied for electricity bills to be increased by 20.5%. Drakenstein and various other municipalities wrote to NERSA and Eskom to raise objections against the unaffordable increase requested by Eskom. I am happy to report that we were successful, and NERSA approved an increase of 8.61%.
The Municipality will therefore pay 8.61% more for electricity in the new financial year. To offer further relief to our ratepayers, we decided to increase electricity by 7.47%. This is still subject to NERSA’s approval.
Speaker I would like to take this opportunity to thank our ratepayers for honouring their commitments in paying their municipal accounts; the quality of services we render is only possible due to the co-operation of our community in honouring their commitments.
Speaker, in conclusion building on our successes over the past five years, the proposed final budget is pro poor, supports economic and social development and ensures financial sustainability.
Drakenstein’s Vision 2032 and its strategic objectives are aligned to the national, provincial and district strategic objectives and outcomes. The proposed final Budget, aligned with the IDP, Spatial Development Framework and the Disaster Management Plan also tabled today, is based on realistic revenue streams and is credible and sustainable as confirmed by the assessment report from the Provincial Government.
I would like to take this opportunity to thank the Deputy Executive Mayor, MMCs, City Manager, CFO, Executive Directors and all staff who played a role in compiling this budget.
Speaker, with these remarks, I hand over to the Deputy Mayor Ald. Gert Combrink to table the 2022/2023 final Budget.
I thank you.