Select Committee on Finance

1. Presentation by the Ekurhuleni Metropolitan Municipality City Manager: Mr. Patrick Flusk Select Committee on Finance

2. Municipality’s Budget • 2008/09 Budget Approved May 2008 • 2008/09 Budget Adjusted August 2008 • Capex Budget close to R3 billion • Opex Budget: R12.8 billion (excluding internal charge-outs) • 2009/10 Budget currently being compiled • To be tabled to Council February 2009 • Final approval April 2009 • Salary cost less than 30% of budget • Maintenance cost almost R1.4 billion (11% of budget)

3. Financial Issues Current Service Delivery Backlog (estimated) • 205 000 houses @ R43 000 = R8.8 billion • 130 000 serviced stands @ R17 000 =R2.2 billion (water, sanitation and toilet only) • 2 050 km roads @ R3,9 billion • R2,5 billion electricity (R1,2 billion for housing and R1.3 billion for bulk) • TOTAL: R17.4bn

4. Social Package Free Basic Services – Water and Electricity   Water Residential Users 6 kl per month Water Indigents 9 kl per month Sewerage Residential Users 6 kl per month Sewerage Indigents 9 kl per month Electricity Residential Users on Tariff A 100 kWh per month Refuse Removal Indigents First step free Assessment Rate Rebates Residential 40% Rebate Indigents 100% remission on land value up to R20 000 Pensioners with gross monthly income up to R8 000 will qualify for additional remissions of between 40% and 100%.

5. Financial Issues • Affordability of Capital Programme • Between R2b and R3b per year for the next 3 years • Long term financing strategy shows limited capacity for internal funds after 2011 unless major improvement in income levels are achieved (excluding loan funds of R3 billion to be taken up). • Greater reliance on external grants from 2011 onwards. • Achievement of backlog eradication goals dependant on higher levels of grant funding. • Possibility of using grant funding for higher gearing levels to be further discussed with NT.

6. Financial Issues • Grant funding: Additional grants are required to meet the eradication targets. • MIG and PHB: • MIG – DPLG Business Plan approvals to be re-considered. MFMA Circular 14 process is supported. • PHB – Grants to be gazetted for three year period to enhance budget and planning process. • Impact of grants: consider the following: • Capacity to spend – EMM is currently improving spending levels, but capacity to spend more than R2b (all sources) per year is still being developed. • Impact of future operating budgets – The maintenance of assets has an impact on the operating budgets. One needs to consider how much increased spending on maintenance can be absorbed in the operating budget without impacting too negatively on tariffs. Can there be a special maintenance grant?

9. Capital Expenditure

10. Revenue Collection • Target of 95% collection levels for 2008/09 financial year • Currently 91% payment level • Staff arrears being deducted from salaries where employees have agreed in writing • Indigents debt being monitored on monthly basis • All registered indigents’ status re-verified this year

11. MFMA Compliance • EMM is doing well with regards MFMA. • Compliance key deliverable in all S57 performance agreements. • Quarterly reporting to Mayoral Committee regarding compliance with various MFMA Sections. • Budget and Treasury functioning under CFO (appointed August 2004). • SCM compliance being monitored on an ongoing basis. • All bids committees established and fully operational. • AFS submitted to AG on 29 August 2008, audit currently nearing completion. AG report expected end November 2008. • Section 71 reports submitted on a monthly basis, copied to NT and PT. • Annual report (draft) submitted to AG on 29 August 2008, and to Mayoral Committee during November 2008. Final containing AG’s report to be submitted to Council January 2009.

12. Spending with regards to Conditional Grants

13. Relationships with National and Provincial Departments • Regular interaction with National and Provincial Treasury, DLG and other sector departments. • Participating in DLG’s SAICA advisor programme to enhance financial skills of the municipality.

14. Partnerships • Economic • Banking sector support to SMME’s and low cost housing • Exxaro & Impala Platinum Refinery has set up a SEDA -Ekurhuleni base metal incubator focusing on Beneficiation • Social • Demilitarization project • Governance • OR Tambo International Airport renamed • MOU with OR Tambo District finalised

15. Capacity Constraints • Organisational capacity = 17133 • Scarce and priority skills • Engineering • Planning • Accounting • Auditing

16. Learnership Programme • 130 students : qualification will range from NQF level 2 – NQF level 3 • Mechanical Engineering • Electrical Engineering • Building and associated trades(plumbing, bricklaying, capentry and painting) • Boiler making • Auto electrician

17. Bursary Programme & Other Programmes • 40 Student to be finalised for • Civil Engineering • Mechanical engineering • Electrical engineering • Architecture • 30 Students – Work Integrated Learning with UoJ • EPWP - 2 year programme started in August 2006 with 38 learners. Qualification is on NQF level 2 and NQF level 4. • Finance Interns (20)

18. Special Programmes • Development and transformation • Sustainable Development Project for Nigel (pilot in partnership with DBSA, J&J Trust, ABSA and UCW) • Model for supply and demand will be finalised through the participation of multiple stakeholders • Community based planning as a tool for the IDP – ward based IDP plans • Roll out of Dreamfields – soccer development at schools • Skills development linkages between factory and education sector • Leading and borrowing needs of workers and communities • SDBIP leveraged as the primary tool for assessing performance • Full alignment between individual and departmental measures • System developed for input and extract of reports • Indicators and measures improved • Audit of information, audit of results part of cycle on performance

19. Alignment of IDP to Provincial GDS:EMM Planning Framework Local; Provincial (PGDS etc); National Guidelines (NSDP etc) EGDS 2025 WARD PRIORITIES 5-Year IDP Multi Year Budget Annual IDP SDBIP Implementation Performance Assessment Annual Report

20. Overview of 5 year plan • Presented to Council 29 June 2006 by Executive Mayor taking key developmental challenges into account • Economic Development, Infrastructure provision and planning to favour underdeveloped areas (20 Priority Township Programme) • AsgiSA focus, enterprise development, cooperatives and job placement • Local Aids Council • Women and youth focus • 17 Customer Care Centres – Batho Pele • Developmental programme at ward level (halving poverty and unemployment) • Growth and Development Summit Outcomes (2 September 2006) • Partnerships with private sector, provincial and national govt • Implementation of the Human Settlement plan • Integrated transport system highlighted • Accelerate land release

21. Purpose of SDBIP Reviews • Quarterly review of service delivery to focus on: • Delivery on IDP strategic priorities • The inputs made into the SDBIP System developed will be used for this. It is expected that the inputs will be signed off by the head of the department before this review • Cluster reports reviewed and explained by DCM’s • Assessment of Budget Spend and Review of Payment Levels • The CFO reports on these matters • Receive reports on Audit of information previous Quarter results • Chief Audit Exec reports on this • Consider Improvements to Service Delivery • City Manager to report on these

22. Value Chain: Performance on Service Delivery November to March finalization of plans all department in Readiness by April for delivery May June July to June Dept Budget Planning integrated Deliverables cascaded Performance agreements in place Planning and finalization Old year and New Year Implement Deliver Manage Process on transparency Performance Agreements on website June SDBIP reports to Portfolio Quarterly Indiv Perf review to serve at portfolios Annual report to include Performance Reports SDBIP , IDP & Budget on Website May

23. Thank You!