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Note to editors: the following speech on the adjustments budget was delivered by the City’s Executive Mayor, Patricia de Lille, at the Council meeting on 26 January 2017.

Mr Speaker

Over the past five years, the City of Cape Town has consistently kept to its commitment to residents to improve service delivery and build a well-run government which prioritises sound financial management.

This has been proven year on year by our four consecutive clean audits from the Auditor-General.

There have been many successes and we have maintained the highest level of service delivery in the country, but we know that there is still much more to be done.

A key exercise in our duties to maintain good financial management is the continual review of our work and projects throughout the year and making the necessary adjustments to ensure that we continue on a path of progress.

Mr Speaker, in terms of the Municipal Finance Management Act (MFMA), Council may consider an adjustments budget as part of good financial practice.The adjustments budget which is before us today is used to accommodate changes that have taken place in the financial record and system of the City since the adoption of the budget, as prescribed by legislation.

Section 28 of the MFMA prescribes that a municipality may revise an approved budget through an adjustments budget.

Mr Speaker, it must also be noted that the MFMA specifies that adjustments budgets are to be tabled for approval by Council before 28 February and following the tabling of the MFMA Section 72 mid-year assessment report.

Councillors will have noticed that both of these reports are on our agenda today.

We are to consider adoption of the adjustments budget a full month earlier than the deadline set by law.

We do this, of course, to ensure optimum service delivery. Adoption of the adjustments budget in January allows for a five-month service delivery implementation period, based on upgraded project- and service delivery implementation plans.

If we were only to do so in February, it would leave us with only four months to the end of the financial year.

Speaker, as required by law – more specifically Section 72 of the MFMA – I received a mid-year budget and performance assessment report at the end of the first half of this financial year from the City Manager.

I considered the current status and progress, as well as the projected outcome of budget implementation by financial year-end at June 2017.

In addition, I reviewed progress to date and anticipated outcomes on service delivery targets and performance indicators.

I concluded, as permitted by MFMA regulations, that our service delivery and performance will be enhanced by preparation of an adjustments budget to give effect to optimum service delivery from the resources at our disposal.

Mr Speaker, primary reasons for the recommendation to adopt the January adjustments budget result from approved committed 2015/16 grants received from National and Provincial Treasury, re-phasing of internal funds where implementation will continue in the 2017/18 financial year, and the realignment of the sundry budgetary provisions resulting from updated implementation programmes.

In terms of the multi-year funds shifting in relation to the capital programme, the reasons for the multi-year shifting are outlined in the report before us today.

In terms of allocations and grant adjustments, the Urban Settlements Development Grant (USDG) increases by R157,4 million in 2016/17 resulting mainly from:
· Approved committed 2015/16 conditional grant allocation of R149,5 million
· R7,9 million increase on capital budget with a related decrease on the operating budget to, among others, facilitate land acquisition

Committed 2015/2016 conditional grants approved by Provincial Treasury resulted in the following increases in 2016/17:
· Library Services – Conditional Grant: R2,9 million
· Library Services – Metro Library Grant: R1 million
· Transport and safety compliance – rail safety grant: R3,6 million

Mr Speaker, in terms of operating grants amendments, the adjustments budget includes additional allocations from private donors.

For Safety and Security:
· Additional grant funds from the Airports Company of South Africa (ACSA) of R1,3 million, from Traffic Free Flow PTY Ltd R1 million was received, just over R508 000 from the V&A Waterfront for the appointment of traffic officers within the Safety and Security Directorate
· R1,7 million was received from the Western Cape Government Department of Community Safety for ongoing law enforcement auxiliary services requirements

For Social Services:
· Health received additional funding through a donation of R450 700 from the University of Connecticut to increase capacity to the Gugulethu Clinic to provide health services to community members and from Stellenbosch University an amount of R928 709 was received for routine HIV monitoring
· R13,3 million was received from Global Funding, HIV & Aids and Personal Primary Health Care services for vaccines, ARV nutrition and TB treatment
· And R1,3 million funded from the Library Services conditional grant to cover additional materials in various library facilities

Other operating grant amendments include:
· R77,1 million to the Transport and Urban Development Authority which will be used to cover operating costs for cleaning and security for public transport interchanges (PTIs), payment of industry transition compensation, and the integrated transport plan among others.
· R5,6 million received from Planning, Maintenance and Rehabilitation of Transport and Infrastructure for updating of the comprehensive integrated transport plan

Also before us today are adjustments on revenue and expenditure estimates.

The amendments/reallocation of funds/savings from Salaries, Wages and Allowance (R263 million), Property Rates (R598 million) and Internal Loan Interest (R48 million) which were allocated to meet sundry budget requirements within the following directorates:

For the Informal Settlements, Waste and Water Services Directorate, R210 million allocated as follows:
· R80 million for water meter replacement
· R60 million for repairs and maintenance, overtime and security costs
· R40 million on indigent relief to absorb the impact of the Level 3 water restrictions on the poorer households
· R30 million top-up on the contribution to water Services to absorb the cost of providing free basic services

The Safety and Security Directorate will receive R8 million to cover the overtime costs for beach lifeguards (R1 million), Disaster Risk Management volunteers (R1 million), and to support major international and community events that act as key economic drivers and reaffirm the City’s competitiveness (R6 million).

The Corporate Services Directorate will receive R7,4 million for municipal court support.

Last year, I informed Council that we would be increasing capacity in our call centres by employing more staff to increase response times. The Area-Based Management Directorate will receive R4,8 million to improve response times in the corporate call centre (R1,8 million) and to cover the operating costs of this newly created directorate (R3 million).

For the Social Services Directorate, Recreation and Parks will receive R30 million for security costs resulting from escalating vandalism across all areas of the city.

Mr Speaker, the adjustments budget also takes into consideration the finalisation of Phase 1 of the ODTP and the allocation and appointment of community liaison officers to ensure the operational readiness of the new directorates.

In terms of capital amendments, the Assets and Facilities Management Directorate was allocated an additional R10,2 million (2016/17) and R5 million (2017/18) for projects funded by the External Financing Fund as follows:
· Completion of various projects at the Athlone Stadium such as the installation of new fencing to secure the west stand and Phase 2 of the CCTV installation
· Upgrading of City Hall to ensure that the City Hall is electrically compliant

The Finance Directorate receives an additional allocation from the External Financing Fund amounting to R8,2 million in 2016/17 for:
· CCTV cameras, which will be used in the stores to limit the shrinkage of inventory
· CCTV cameras at some of the walk-in centres which also require replacement as the current cameras have become uneconomical to repair
· Replacement of obsolete IT equipment

Mr Speaker, I have outlined some of the adjustments and the reasons for them.

In closing, our strategy to improve spending in the city and to lead the way in service delivery and in infrastructure-led growth has yielded great results. Most of all, it has made Cape Town the site of opportunity and excellence in governance.

This was reaffirmed by the resounding mandate we received from the public in August 2016 because we have proven and we will continue to uphold our commitment to effectively manage the public funds we are entrusted with while bringing progress to our residents.

The improvements we have implemented in the organisation over the past few years include improved tender demand and supply chain management; extensive monthly reporting systems; project management training; improved due diligence processes; and transversal management to enhance collaboration between departments and a holistic approach to delivery.

These changes and the results are also due to the change towards the methodology of planning, especially in our project portfolio management (PPM) system.

All of this has prepared us for a much bigger project of achieving positive systemic change through the ODTP, which consolidates all of these changes into one plan to build a more sustainable, responsive, and effective organisation and help to take local government to the next level.

Indeed, these changes and the ODTP will bring a greater service delivery focus, greater parity of services to everyone in the city, reverse the legacy of apartheid spatial planning, and build a greater connection between the City and the residents we serve.

The positive results we have seen in our spending and in our clean audits have not come about by accident. They have been made possible by all these changes I have just referred to.

I believe the time has come where more civil servants in this organisation must realise that improved spending and achieving clean audits is not a prize but an obligation to the people we serve.

Let us work with this motivation in mind so that we can take our city to the next level and continue to make progress possible together.

Thank you, baie dankie, enkosi, shukran.

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