Mayor’s Newsletter: Written 19 April 2021

On 31 March 2021, the Municipality’s draft budget for 2021/22 to 2023/24 was tabled in Council. In an earlier newsletter, I commented on the structuring of electricity tariffs as they form an integral part of municipal budgets.

Over the past decade, high electricity tariff increases have dominated the basket of services provided by municipalities to the extent of limiting realistic tariff increases required for water, sewerage, refuse and property rates to make overall increases to residential and business customers affordable.

Municipalities are “price-takers” for increases granted to Eskom by Nersa for the bulk electricity purchases as well as nationally negotiated salary increases for municipal employees. These two expense categories comprise 50% (R1249m) of our Operational Expenditure budget of R2496m. Contracted services which include the operational expenditure on Housing projects and GIPTN amount to R599m (24%). The remaining expenditure of R648m covers all the other categories.
For the Operational Budget to balance, Revenue needs to exceed the Expenditure. The increases for Employee Related Costs and

Bulk Purchases, therefore, result in other tariffs being much lower to ensure that affordable tariffs are levied to our customers.

Core Services Revenue is budgeted at R1619m (or 62%) out of Total Revenue of R2628m with Grants Received amounting to R707m (27%). The balance comprises Sundry Revenue of R302m (11%) which includes bus fares of R86m. Electricity contributes R875m or 54% of our Core Services Revenue.

In summary, the administered prices have squeezed the flexibility in levying above inflation tariffs on other services that would realistically provide for sufficient funding for the refurbishment of water, sewerage, roads and storm water infrastructure. The poor management at Eskom has therefore resulted in pressures on municipalities who should have been spending more to maintain and upgrade infrastructure that has served us for the past 40-50 years. In the coming years, the next challenge will be to increase expenditure on maintenance and refurbishment.

We have already embarked on a programme of improving productivity in spending less in certain areas to make more money available for upgrades in infrastructure.

As active citizens we all need to be mindful of our environmental footprint to assist in ensuring that our spending is productive. The Clean George campaign that has recently been launched is targeted to spend approximately R1 000 000 per month employing temporary workers to clean up litter, get streets and verges clean, etc. While providing necessary employment in austere times, these funds could be spent more productively to provide greater value to our communities, e.g. facilitating economic activity. By using the available refuse collection channels and stopping littering, our citizens could therefore help in improving the services of the municipality.
We all need to work together.

Die konsep begroting vir die 2021/22 finansiële jaar is verlede week ter tafel gelê en het die nuwe tariewe vir elektrisiteit ingesluit. Ek verduidelik hieronder hoe hierdie tariewe bepaal word.

Nersa (“National Energy Regulator of South Africa”) bepaal die verhoging van elektrisiteitspryse wat Eskom aan verbruikers mag deurgee. Die prys waarteen elektrisiteit aan Munisipaliteite (“Muns”) verkoop styg met 17,8%. ‘n Formule word deur Nersa gebruik om die prysstyging wat Muns aan verbruikers kan deurgee, te bepaal. Bedrae vir onderhoud, salarisse en die netto toelaatbare marges op elektrisiteit word in hierdie jaar se verkoopsprys-styging van 14,59% ingereken.

Eskom verskaf dus elektrisiteit aan Muns teen die grootmaat-prys. Muns is dan verantwoordelik om hul eie verspreidingsnetwerk en substasies in stand te hou om hulle huishoudelike- en besigheids- verbruikers van krag te verskaf. Die kostes om elektrisiteit te versprei sluit onder andere die volgende in: onderhoud op kraglyne, transformators, substasies, onderhoudspanne, waardevermindering op toerusting, asook die interne gebruik van krag (vir pompstasies, straatligte, geboue) en behels ongeveer 30% van die totale aankope.

Daar is verskillende tariewe waarteen Eskom krag aan Muns verkoop afhangende van “piek” of “nie-piek” tye vir “winter” en “somer”. Die totale bedrag vir aankope vir die jaar is dus die kilowatt-ure teen die verskillende tariewe. Die Muns moet gevolglik daagliks statistiek hou van hulle aankope en verkope teenoor die verskillende tariewe en wie die verbruikers is.
Om die verkoopspryse te bepaal moet elke Mun die verbruikspatroon ontleed. Nywerhede word teen “time of use” tariewe gehef; “piek”-tariewe is dus baie duurder as ander tye. Die tarief vir verkope aan huishoudings word teen ‘n gemiddelde prys vir die jaar bepaal wat laer is as die hoë “winter-piek” pryse (maw die Mun verkoop teen ‘n verlies) maar wat ook die laer “somer”- en “nie-piek” tye in ag neem.

Ons Mun gebruik tans (2020/21) nog ‘n eenmalige tarief van 206,4 sent per kilowatt-uur sonder BTW (237,3 sent BTW ingesluit) vir alle verkope aan huishoudelike verbruikers (deernis-gevalle betaal minder vir ‘n getal eenhede). Sommige van ons naburige Muns het alreeds ‘n basiese beskikbaarheids-heffing begin toepas waar huishoudings ‘n bedrag van byvoorbeeld R50 (of R100) per maand betaal voordat hulle kilowatt-uur eenhede aankoop. Die aanvanklike blok eenhede wat aangekoop word sal dan goedkoper wees as die eenmalige tarief wat George hef maar daarna styg die tarief soos addisionele blokke aangekoop word. Hierdie stelsel word ook die “inclining block tariff” stelsel genoem. George moet nog die besluit neem of die laasgenoemde stelsel in die toekoms ingestel gaan word.

Die verkope van elektrisitiet vir 2021/22 word op R875m beraam (teenoor aankope van R616m) wat 54% van George se inkomste uit kerndienste en belasting verteenwoordig. Hierdie inkomstebron is dus uiters belangrik vir ons hele samelewing.

*************************************************************************************************************

The draft budget for the 2021/22 financial year was tabled last week and included the new tariffs for electricity. The Executive Mayor Leon Van Wyk, explains below how these rates are determined.

Nersa (National Energy Regulator of South Africa) stipulates the increase in electricity prices that Eskom may pass on to consumers. The price at which electricity is sold to Municipalities (“Muns”) increases by 17.8%. A formula is used by Nersa to determine the price increase that Muns can pass on to consumers. Amounts for maintenance, salaries and the net allowable margins on electricity are included in this year’s sales price increase of 14.59%.

Eskom therefore supplies electricity to Muns at the bulk price. Muns is then responsible for maintaining their own distribution network and substations to power their domestic and business consumers. The costs of distributing electricity include the following: maintenance on power lines, transformers, substations, maintenance teams, depreciation on equipment, as well as the internal use of power (for pump stations, street lights, buildings) and comprises approximately 30% of total purchases .

There are different rates at which Eskom sells power to Muns depending on “peak” or “non-peak” times for “winter” and “summer”. The total amount for purchases for the year is therefore the kilowatt hours at the different rates. The Muns must therefore keep daily statistics of their purchases and sales against the different tariffs and who the consumers are.

To determine the selling prices, each Mun must analyse the consumption pattern. Industries are charged at time of use rates; “Peak” rates are therefore much more expensive than other times. The tariff for sales to households is determined at an average price for the year which is lower than the high “winter-peak” prices (ie the Mun sells at a loss) but which also includes the lower “summer” – and “not peak ”times.

Our Mun currently uses (2020/21) another one-off rate of 206.4 cents per kilowatt hour without VAT (237.3 cents VAT included) for all sales to domestic consumers (indigent consumers pay less for a number of units). Some of our neighbouring Muns have already started applying a basic availability levy where households pay an amount of, for example, R50 (or R100) per month before purchasing kilowatt-hour units. The initial block of units purchased will then be cheaper than the one-time rate charged by George but thereafter the rate will increase as additional blocks are purchased. This system is also called the “inclining block tariff” system. George has yet to decide whether the latter system will be introduced in the future.

Sales of electricity for 2021/22 are estimated at R875m (compared to purchases of R616m) which represents 54% of George’s revenue from core services and taxes. This source of income is therefore extremely important for our entire society.

NEW BANK DETAILS FOR MUNICIPALITY
George Municipality bank account details for the payment of accounts and services are changing from 1 December 2020.
In future, for utilities such as rates, refuse, water and electricity please use:
Bank: First National Bank (FNB)
Account Name: George Municipality
Account Type: Public Sector Cheque Account
Account Number: 62869623150
Branch Code: 210554
Swift Code: FIRNZAJJ

For traffic fines only:
Bank: First National Bank (FNB)
Account Name: George Municipality
Account Type: Public Sector Cheque Account
Account Number: 62869623168
Branch Code: 210554
Swift Code: FIRNZAJJ

• The old account is being phased out, please amend as soon as possible, but is still currently active and payments made so far will have been received.
• If you have a debit order on your account, details will automatically be updated. If you have created an account for online banking, please delete the old account and create a new one with the details as below.

Daar word tans heelwat aandag aan die moeilike tye wat munisipaliteite ervaar in die media gegee. Ek wil graag George se prentjie in die lig hiervan skilder.

Dit word genoem dat indien munisipaliteite sou misluk, dit dan bydra tot die agteruitgang van die land se ekonomie. Baie munisipaitieite buite die Metros en die sekondêre stede sukkel met effektiewe bestuur van die dienslewering wat verskaf moet word. Hulle sukkel om betroubare water, riool-dienste en elektrisiteit te voorsien en betalings vir dienste gelewer in te vorder. Dikwels is hierdie probleme as gevolg van swak bestuur en oorsig deur die stadsrade.

In George is ons tans hard besig met regstellende aksies om te verseker dat dienslewering van hoë gehalte gelewer word. Daar word tans na die versterking van bestuur gekyk asook om toe te sien dat begrotings spandeer word om infrastruktuur te onderhou, te herbou en uit te brei om ekonomiese aktiwiteite te bevorder. Daar word gevolglik klem gesit om ‘n omgewing te skep wat sake sal vergemaklik en beleggers lok om die plaaslike en streeks- ekonomieë te laat uitbrei en werksgeleenthede sal skep.

George is in die gelukkige posisie dat die munisipalitieit een van die 19 “sekondêre stede” in die land is terwyl daar ook die 8 “Metros” bestaan. Ons word dus met Drakenstein en Stellenbosch in die WesKaap vergelyk asook Mbombela, Rustenburg, Emfuleni en Polokwane elders in the die land. Die sekondêre stede vervul dus ‘n belangrik rol om die streeks-ekonomieë te bevorder.

Die agt Metros het in die jaar tot 30 Junie 2020, R249bn (59%) van die totale bedryfs- en kapitaal-uitgawes vir alle munisipaliteite spandeer, terwyl die sekondere stede R49bn (12%) spandeer het. Al die ander kleiner plaaslike munisipaliteite het saam R82bn (20%)  spandeer terwyl die Distrik-munisipaliteite saam R39bn (9%) spandeer het.

Ons is tans ook in die proses om die begroting vir die komende 2021/22 boekjaar voor te berei. Die kern funksies van ‘n munisiplaitieit verlang dat  basiese dienste verskaf moet word: voorsiening van water, riool-dienste, elektrisiteit, vullis-verwydering en strate en stormwater. Hierdie dienste behels tans ongeveer 74% van die bedryfsuitgawes. Bykomende dienste vir ons munisipaliteit bestaan uit beplanning, ekonomiese ontwikkeling en toerisme, brandweer, verkeer en wetstoepassing wat ongeveer 12% van die begroting opneem. Die administrasie insluitend afdelings wat regs-, rekenaar- en interne oudit-dienste insluit, behels ‘n verdere 8,5% van die begroting. Die oorblywende 5,5% van die begroting word gebruik om na gemeenskap en sosiale-dienste verpligtinge om te sien.

Daar word beplan dat die kapitaal-begroting vir die 2021/22 jaar grootliks gebruik sal word om die rioolwerke te vergroot asook om uitbreidings aan die waterwerke te loods. Hierdie beleggings in infrastruktuur word benodig om meer kapasiteit vir die groei van George te verskaf. Ons riool-pompstasies en paaie verg ook aandag.

Mayor Newsletter: 8 February 2021

The recent opening of beaches and of liquor stores has hopefully provided a more positive outlook for all of us as we continue to deal with the new normal that we are experiencing since the arrival of Covid-19.

This news has coincided with the ongoing efforts this past week to examine how the Municipality can improve the effectiveness of its operations. The Acting Municipal Manager is leading this process with exercises being undertaken to examine ways of reducing costs while maintaining productivity.

This exercise provides the opportunity for renewal and is essential as the Municipality needs to ensure cost containment measures are put in place to curtail our Expenditure to the level of Revenue being generated.

It is evident from discussions with the business sector that the second Covid-19 wave halted the more positive outlook that had emerged by October. It is apparent that many in the retail sector experienced a year-on-year decline in turnover over December and January in George. This trend is concerning as virtually all of our customer base have been affected to a lesser or greater extent.

This impacts on the Municipality’s finances through the reduction in Revenue and lower debtor collection rates of our monthly accounts and therefore also on cash flow. We are constantly re-examining the estimated effects on our cash flow for the rest of the financial year to 30 June 2021 and the adjustments that will be required.

While we are dealing with the above financial impact we are also in the midst of a major capital expansion project to enlarge the capacities of our waste water and water treatment plants along with refurbishment that will require the funding and affordability of projects amounting to approximately R1 billion over the next three years. Growth in housing stock and other infrastructure in George has continued year by year resulting in the requirement to undertake the expansion. Amendments are being made to policies to enable the appointment of the necessary expertise to manage these projects.

As I have indicated above we live in interesting times as we search for hope, positivity and optimism. From a municipal perspective, we are striving to balance the present challenges while planning for the future. We will be continuing our engagements with the community under the “First Thursday” brand with the intention of holding collaborative discussions with various sectors to inter alia understand how we can facilitate additional economic activity within the George economy. We need to both preserve and grow jobs. This needs to be our constant objective. Any suggestions for such engagements can be forwarded to: mayor@george.gov.za

Mayor Newsletter: 11 January 2021

In mid-December there was eager anticipation for the holiday period in the Garden Route after enduring the Covid-19 pandemic for many months. We needed an economic boost for the tourism and business sectors so dependent on seasonal business.

At the same time, the second wave of Covid-19 was reaching its peak in George with active positive cases well above the first-wave peak but followed by a decline in numbers in the second half of December. Although healthcare workers were under severe pressure, thankfully they were managing. We saw increases in the numbers of persons who died, including municipal employees. Tragically, many of us now know someone who had have been ill or who have succumbed to the disease.

Suddenly from 15 December, after the announcement of the beach closures, there was a spate of cancellations of accommodation bookings. Many of our businesses rely on the core six-week December-January holiday season to generate 25-30% of their annual turnover which is usually crucial to support their overheads for the rest of the year.

In attempting to manage the financial effects of the pandemic we have become acutely aware of the delicate balance required between health and the effect on the economy. Without the benefit of good turnovers over the holiday period, further jobs could be lost as businesses find it tough in the coming year. As a result, it is likely that the George Municipality will experience a reduction in revenue and debtors’ collection.

The municipality is constantly looking to adapt how it conducts business safely with a hybrid model of working virtually and face-to-face. It is crucial that the health of employees and the public is considered. Our core services continue 24/7 and staff work around the clock to ensure the provision of water, sewerage and electricity, fire services, law enforcement, etc. We encourage our citizens to make use of available online methods of conducting business with the municipality where possible and is being communicated widely. Citizens are encouraged to download the George Municipality mobile application ( https://george.comunity.me ) to their phones which enables the receipt of important notifications.

On Monday 4 January 2021 we welcomed Dr Michele Gratz as Acting Municipal Manager (AMM) as well as Mr Allan Paulse as Acting Director: Community Services. Both are highly experienced administrators. The AMM has immediately commenced with measures that will improve workflow, efficiencies and use of resources and assets. Over the next few weeks and months, we can expect improvements in service delivery as processes are upgraded.

Please continue to keep safe by adopting the Covis-19 health protocols wherever you are. Every citizen needs to adhere to the protocols to ensure our safety.

Following the departure of two senior officials in the past week, we will shortly move forward to implement remedial measures to improve and correct management practices to effect a positive impact on standards of service delivery.

Over the past few years the Council has been dealing with allegations of financial misconduct and forensic investigations. These incidents are indicative of the challenges encountered in ensuring that effective governance is maintained. Successful local government requires a fine balance between legislation, available budgets, service delivery needs, governance, management and the execution of projects and services. Any disruption of this balance ideally needs to be avoided.

We have encountered such a disruption of the fine balance during the recent decline in refuse collection standards where many residents have expressed their displeasure. We are grateful to the managers who have stepped in to restore service delivery standards. While some administrative processes are still receiving attention, steady progress is being made to restore service standards.

We are heartened by some sage, understanding and encouraging comments expressed by residents who appreciate the complexity of issues that are being dealt with in the municipal space at present. It is so important to remain positive and express hope as we deal with the above issues and those below.

During 2020 we have encountered both the weak economy and the Covid-19 pandemic. We are now experiencing a spike of active positive cases in George and in the Garden Route. As of Monday 7 December the Municipality has 48 staff members in isolation with a total of 159 persons (1 in 9 of the staff complement) who have already experienced the virus (with 4 deaths to date). This should provide some context to the trials being faced. Within the health sector, the George Hospital staff complement is being overwhelmed. As we enter the holiday season, we need to appeal to all our citizens to take extra care in observing the critical health protocols of wearing masks, washing hands, maintaining social distancing, avoiding crowded and poorly ventilated spaces, staying home when feeling sick.

The gross financial effects of Covid-19 on the Municipality is such that the equivalent of one month’s Revenue has either been lost or may not be recovered. An exercise to contain Expenditure has been underway for the past few months as we need to match Expenditure to expected Revenue levels. This remains an ongoing challenge.

Our economy has been adversely affected impacting on both our business and individual customers. We are extremely grateful to our customers who have managed to continue to pay their accounts thereby assisting the Municipality to maintain financial stability since the commencement of the pandemic.

We wish all our residents and visitors a wonderful and safe Festive Season.

Executive Mayor Leon Van Wyk, Part One of a regular letter to the citizens of George – the Mayoral Perspective

The George Municipality Council has experienced complex challenges during 2020 ranging from allegations of maladministration, to the sluggish economic conditions made worse by the Covid-19 pandemic, the resultant decline in service delivery standards and the turnaround underway to once again place George on a trajectory of clean government and governance.

In September 2019, three forensic investigations were launched into the allegations of maladministration at George by the Western Cape Government (“WCG”). They related to the “War on Waste” (“WoW”), the “construction of Nelson Mandela Boulevard” (“NMB”) and the appointments made in relation to the “Expanded Public Works Programme” (“EPWP”). A fourth investigation into certain Appointments is currently underway.

Shortly before the Covid-19 pandemic lockdown period commenced, the WoW report was tabled in Council with a recommendation that an independent disciplinary investigation into the actions of the implicated managers be undertaken. This report will be tabled before Council shortly. A separate investigation by the Priority Crimes Investigation Unit has resulted in the implicated officials appearing in Court to face criminal charges.  At the end of October 2020, Council referred the NMB and EPWP investigation reports for disciplinary investigations by external professional firms as required by the Municipal Systems Act.

These investigations have no doubt been unsettling for the Administration and had an impact on the normal high standards of service delivery expected by George citizens. There are many dedicated, honest and loyal officials who have assisted in the efforts to restore clean administration. They have been granted the space to implement the necessary changes within the Community Services Directorate to effect a gradual improvement in the refuse collection service and the clearing of illegally dumped refuse.

During the past seven months, the Municipality has also had to manage the fall-out caused by the Covid-19 pandemic that resulted in the periodic closure of offices, staff being infected and sadly some staff members losing their lives. Over 137 soup kitchens were operated daily at the peak of the pandemic to provide thousands of servings per day to vulnerable members of our communities.

The negative financial effects of Covid-19 have resulted in a reduction in the payment of service accounts, sundry revenue, lower sales of bus tickets, and additional expenditure incurred to combat Covid-19.  The debtors collection rate has reduced from a consistent 96% to an average of 91% per month since March 2020.

The impact on our economy and customer base and how the municipality will be dealing with these complex issues during the economic recovery phase will be dealt with in series of letters to the public of George from

https://documentportal.george.gov.za/storage/newsletter-with-accounts/November2020/PZf8D6uid6JTQznAjcS9.pdf