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NEWCASTLE MUNICIPALITY BUDGET POLICY STATEMENT BY MAYOR CLLR. DR NTUTHUKO MAHLABA, 29 JUNE 2020
Madam Speaker, we commence today’s annual budget address themed “The People’s Budget” by making reference to a quote by the Honourable Premier of the Northern Cape Dr Zamani Saul who said, open quote “IT CAN’T BE THAT AS THE PREMIER I GO TO JOBURG, I SLEEP IN A HOTEL FOR R5 000 A NIGHT AND WE TREAT THAT AS NORMAL. YOU SLEEP FOR TWO NIGHTS ITS R10 000. WE SHOULD STOP THOSE THINGS, THOSE THINGS SHOULD COME TO AN ABRUPT END. WE ARE NOT HERE FOR THAT,” close quote.
Dr Saul’s intriguing rational and message drew a sharp societal discourse which interrogated the moral fibre of leaders of society, and the general populace at large. Dr Saul is a fine example of the calibre of leaders injected to society by our glorious movement which has liberated our people from the yoke and shackles of oppression. Ordinarily, South Africans place leaders at a high moral ground by assessing their ability to be cognitive and mindful of the supreme importance of avoiding wasteful expenditure; leaders who are pro-transparency and leaders who account for public funds spent. Hence, office bearers are also compelled to always remember that every single cent belongs to the populace whom they serve. Dr Saul’s utterances are a constant reminder for office bearers like ourselves that we serve at the behest of those who have elected us into power. Anyone who indeed shares this attitude is an undoubtable ally of ours.
Madam Speaker, we’ve themed this year’s 2020/21 budget “The People’s Budget.” With the dawn of democracy, in 1994, under the Government of National Unity which was led by the late former President Nelson Mandela; the then Minister of Finance Chris Liebenberg delivered his first budget speech under the new democratically elected government. For the very first time in South Africa, there was a budget allocated to the people, which would be equally distributed among all its citizens, fairly, without discrimination or prejudice. Accordingly, Liebenberg had delivered the first “People’s Budget.” Unfortunately, the same could not be said about his predecessor.
Madam Speaker, today I want to remind residents of Newcastle that we are united in our diversity, with a strong culture and heritage, despite being black or white, male or female, let me remind all that the allocated budget since 1994 belongs to all who reside within this municipality. In saying that, funds allocated to all municipalities belong to the people, not specific individuals, nor to friends of officials, nor to officials or any particular business person. As a result, these funds are allocated to develop the community and improve the living conditions of all our people. Hence, I urge the residents of Newcastle to bare this in mind as I table the 2020/21 budget. Having said that Madam Speaker, the misconception that the municipality is one place for any individual to enrich themselves must be brought to an abrupt halt. Those who have lived off the municipal coffers must now know that those days are long gone. Madam Speaker, let me remind this August House that such unethical behaviour that has plagued this municipality for many years will never return.
Municipal funds belong to our residents as a collective and each and every community member must benefit in one way or another, mainly in the form of effective and efficient service delivery. Madam Speaker, as you are aware we’ve had to make unpopular decisions, for the better good of our municipality and the community at large. An example of such was the drastic cut in “nice to haves” like meals during meetings. Further, we’ve had to sharply reduce cell-phone allowances and encourage officials to purchase their own airtime. These are just some of the many tough financial decisions we’ve had to implement for the betterment of our communities. Our aim was to preserve the legacy of good ethics and values of the municipality.
Madam Speaker, our responsibility should be premised on the improvement of the quality of lives of our people as we advance towards a society that is currently experiencing socio-economic challenges. Hence, ours is to provide water and sanitation, construct more roads in eMadadeni, Osizweni, Normandien, Charles Town, Blaaubosch, Ngogo and every other corner of this beautiful municipal area. As a result our task ahead is to keep the hopes, dreams and aspirations of the “Gogo and Umkhulu” who voted for the first democratically elected government in 1994. Thus Madam Speaker, we need to constantly seek alternative mechanisms to reposition Newcastle Local Municipality as an institution which will never compromise its position of fast-tracking service delivery through operation Khawuleza, operation Sukuma Sakhe and operation “Site-visits”.
Fellow residents, councillors, officials and all interested and affected parties need to end corruption and malfeasance, as we undertake to implement the 2020/21 budget. Ours is to bring back the dignity of our people which was forcefully taken by an oppressive regime which treated one race as sub-humans and the other as dominant. Madam Speaker, we can only achieve this if we continue to be inspired by the doctrines and teachings enshrined in the Freedom Charter. The government of the day, the African National Congress, has declared this year as the “Year of Unity, Socio-Economic Renewal and Nation Building.” Newcastle Local Municipality is thus committed to adhering to nation building and providing services to all regardless of colour, gender, and creed or political affiliation.
The latest audit report from the Auditor General’s office on this municipality indicated that this municipality had obtained an Unqualified Report. This next financial year we are working towards a clean audit, taking into consideration the many challenges we face due to none payment.
Under these circumstances, we’ve had to restructure our finances, adopt and enforce strict cost containment measures in a bid to ensure that this ship sails to its intended destination- a place where service delivery is key and crucial to the livelihood of our people. Madam Speaker, our people cannot be begging and pleading for what is rightfully theirs. We are working on fast-tracking our response time when problems occur, and this can only be achieved by exploring and implementing effective communication methods. We are also tirelessly working on a turn-around strategy of improving all our call-centre operations.
Madam Speaker I therefor present “The People’s Budget” under conditions which are extraordinary, not normal and unfavourable. Under normal circumstances this would not have been the way to address residents of this municipality. Unfortunately Covid-19 has created an invisible barrier between us and them. This too shall pass. As a result, we have been forced to adapt to the changes presented by the pandemic and embrace the 4th Industrial Revolution, and utilize our local radio stations. However, Madam Speaker, for the very first time in many years during the tabling of the municipality budget we are tabling a funded budget. We are mostly at pains for the residents who have lost their jobs, homes and financial stability as a result of Covid-19. The challenges presented by Coronavirus have had an unprecedented negative impact on our local economy as well. The National State of Disaster which was declared under Section 3 of the Disaster Management Act of 2002 (Act 57 of 2002) has also implored some of us to contribute our salaries towards struggling families. As a municipality we are also racing against time to find new ways of rebuilding and reconstructing our economy post Covid-19. Madam Speaker “We will prevail, Sizophumelela”.
In view of the above, the municipality has made an application for financial relief, which will in turn ease the burden faced by some residents who might be struggling to pay for their basic necessities. We applaud and appreciate the efforts made by some landlords who have used their savings for days like these. Madam Speaker, in this regard, we also urge residents to make use of government programs which have been set up to assist struggling businesses and families. I also send a special recognition to banks that have extended their payment with holiday plans. I make a special recognition to NGOs, businesses and individuals who opted to share with the needy and vulnerable during this difficult period. Madam Speaker, ward councillors and traditional leaders- you are among those who have assisted and ensured that the process of identifying needy families was properly conducted.
Madam Speaker, whilst on the ground, we have witnessed confusion, glitches and frustration, but many did not waver in their efforts of carrying out noble tasks and for that I thank you. As a listening and caring municipality we’ve heard your pleas, grievances and concerns. We are working around the clock to find solutions to mitigate the payment impasse by engaging with key partners in government. I hope that the easing of restrictions under level three of the Coronavirus lockdown will remove the burden confronting the restaurant, hotel, tourism, and beauty industry. Madam Speaker, it might take a while for these businesses to recover hence we all need to support these ventures. Covid-19 is going to linger around us for some time.
Young People, Bantu Abasha, you are the future of this municipality and we acknowledge the roles that you are yet to play in developing your communities. As youth month draws to an end, you are prompted to remember that this freedom that we enjoy today did not come very easily. Young people your age died under the hand of the merciless security forces. They died…. Parents lost future breadwinners… parents lost future doctors, future engineers, future teachers, future politicians, future activists and future lawyers. As a municipality we understand your goals and vision.
As a result, this municipality believes in affording young people opportunities which were a distant dream for their parents. Madam Speaker, it is for this reason that that this municipality has set aside R650 000 towards the municipal bursary program. It is also for this reason that the municipality has included the youth among those who are prioritized for employment opportunities. Madam Speaker, your office has also set up a Youth Council to deliberate and involve young people in the administrative decisions taken by this municipality. We want young people to belong and be able to have an easy access to any information regarding our institution. This ANC led municipality understands the historic mission of the fearless youth of 1976; that mission will weigh heavily on us unless we protect it and ensure that it is realized through our youth empowerment efforts. Madam Speaker, this budget has required us to take bold steps which are aimed at improving the lives of our residents. Moreover, we can’t look forward unless we acknowledge the key successes of this ANC-led Municipality. We’ve had challenges, completed our medium term goals, short term goals by being united in our diversity, and strongly believing that we can grow Newcastle together and leave no-one behind in that process. Madam Speaker, last year the municipality embarked on a unique project of galvanizing and lobbying residents to partake in our Keeping Newcastle Clean. The successes of this program prompted other municipalities to follow suit and imitate this initiative; this was after judging from the positive responses from most of our residents. Unfortunately, Covid-19 put an abrupt halt to this campaign. However, we are pleased to announce that our efforts never went unnoticed; with the taxi industry joining our initiative and pledging to assist us further. A number of residents adopted spots as part of our keeping Newcastle Green initiative. Streams and wetland areas were some of these spots which were adopted.
Madam Speaker and fellow residents, I am excited to announce that this ANC-led municipality has taken inimitable strides of making various achievements under strenuous finance pressures due to a struggling global economy. This municipality has not put any of its objectives for the last financial year aside. We’ve set targets for our long term goals and have set phases for the completion of these projects. Madam Speaker let me highlight some of these achievements: To date we’ve built 329 houses for the indigent through the housing program which was mostly aimed at restoring the dignity for first time home owners. These households have access to clean water, sanitation and refuse removal. The municipality is currently in the process of electrifying 500 households which will be completed next month. As a caring municipality we’ve given 9000 indigent households free basic water, electricity, sanitation and refuse removal. This is yet another clear indication that this municipality understands the daily struggles faced by many of our residents, in particular the unemployed and previously disadvantaged. The payment factor of our municipality has increased from 75% to about 83%. 25 residential properties have been advertised for sale. 786 EPWP jobs were created to tackle the high number of unemployment within this municipality. The municipality has done training for 74 SMMEs. 189 title deeds have been transferred though the EEDBS program. A majority of these beneficiaries are first time home owners. 7 kilometres of roads have been resealed within the jurisdiction of Newcastle Municipality. We have accelerated our efforts and response time to addressing potholes as part of “making potholes a thing of the past” campaign. The following roads in Osizweni were constructed and completed in record time. These roads include: 1. OA85B 2. OC20 3. OA85A The following road in eMadadeni was constructed and completed in record time. MD30 was a major priority for this municipality. The municipality completed the planning and design for the upgrade of Ngagane waste water treatment plant phase one. 543 VIP toilets have been installed. The feasibility and design report has been completed for the medical precinct. The municipality has made two appointments of Strategic Executive Directors; namely the CFO and CAE. The mayor’s office has awarded 50 bursaries to university and tertiary institution hopefuls as part of program to uplift the youth. The mayor’s office has had to go beyond the set budget to award a further ten students by linking the students with private donors.
Madam Speaker, allow me to say that “we’ve been working, Siyasebenza.” We hope that these good stories and efforts don’t go unnoticed.
Madam speaker, let us now delve into the business of the day…
The total consolidated budget for the 2020/21 financial year is R2.5 billion, which is made up of R2.4 billion for operational budget and R125.5 million for capital projects (new projects).
Despite our challenges, its remains the mandate and responsibility of the municipality to sustain service delivery through this budget by reprioritising expenditure to ensure key objectives are achieved. Provision in this budget continues to support government’s commitment to broadening service delivery and expanding investment in infrastructure, especially through capital projects, while at the same time taking into account the limited fiscal environment upon which this budget was prepared. The budget has further been structured to contribute to the municipality in achieving the minimum strategic objectives of the IDP, taking into account the effect of limited resources. The National Treasury’s MFMA circulars were used to guide the compilation of the 2020/21 budget. Furthermore, the budget format and the content incorporates the requirements of the Municipal Budget and Reporting Regulations.
The following principles were applied in formulating the annual budget:
– Affordable, realistic and funded budget;
– Realistic and achievable collection rates;
– Rates and service tariffs to be realistic and affordable to consumers;
– Budget to contribute to achieving strategic objectives of the IDP;
– Repayment of loans to be properly provided for, with no new loans planned for;
– Capital expenditure to be mainly funded from grants;
– Indigent subsidy for water be maintained to the national guideline of 6kl;
– Indigent subsidy package to include property rates;
– Revenue driven budget with a view to achieve affordability;
– IDP driven budget in order to achieve the requirements of community based planning.
This budget was not crafted without challenges. The main challenges experienced can be summarised as follows:
– The on-going difficulties in the national and local economy which necessitated costs containment measures as required by Treasury circulars;
– The prevalence of COVID-19 coronavirus pandemic, which required reprioritisation of funds from other functions. The impact on the collection of revenue due to economic slowdown could also not be overlooked;
– National Treasury austerity measures with minimal growth on conditional grants;
– Slow economic growth and unemployment, coupled with the fact that, a number of key industries are shutting down businesses in the area of Newcastle;
– Inadequate allocation for repairs and maintenance due to funds limited;
– Limited capital infrastructure injection with no corresponding provision of near or future maintenance due to limited resources
– Inability to extend capital budget projects in terms of the IDP, other than those funded by grants and already on the business plans.
– The use of income-based budgeting, which has proven that previous budgets had been overstated in expenditure.
– Inability to provide for adequate vacant and critical positions due to limited funding.
– Cutting down on some of the key functions due to limited funds, however prioritising the service delivery (especially maintenance of infrastructure).
– Bulk electricity tariff increase above the increase in revenue tariff increase, which implies additional burden for the municipality.
The overall operational budget, which is the budget to allow normal operations and maintenance, is a total of R2.4 billion, which will be spent as follows:
R126 million has been allocated for bulk Water purchase.
R534 million has been allocated for bulk electricity purchase.
R593 million has been allocated for Employee related costs
R420 million has been allocated for Depreciation
R185 million has been allocated for Debt impairment
R183 million has been allocated for Other expenditure
R41 million has been allocated for interest loans
R95 million has been allocated for Repairs and maintenance
R28 million Remuneration of councillors.
R16 million Contracted services
These are projects which belong to the community. In line with our theme “The People’s Budget” we’ve been tasked to ensure that these projects are carried out as per the mandate by our communities. The appointed municipal units tasked with executing these tasks are urged to complete these projects in record time.
The norm to qualify as an indigent household is R1 100.00, however Newcastle Municipality has accommodated those who earn less than R3 500.00. Madam
Speaker, this is yet another progressive story to tell. Our municipality is constantly at grassroots and constantly interacting with residents through our ward committees.
To date we’ve set aside the indigent package. The maximum of twice the monthly state pension household earnings to qualify for the indigent benefit. Those who qualify will be provided with the indigent package as follows:
Electricity consumption: 50 kW/h
Water consumption: 6 Kl
Electricity availability: free
Water availability: free
Property rates: free
Madam Speaker, after much consideration and deliberation, and also taking into cognizance of what is expected of us as a municipality to render improved access to basic services, the current economic climate that the country faces with Covid-19, we will be implementing the following tariff charges from the 1st of July 2020.
Electricity tariffs will increase by 6.22%. It must be noted that this tariff increase is as per the NERSA’s guidelines of municipal tariff increase as well as the application that has been submitted by the municipality to NERSA. With the tariff increase of 6.22%, electricity revenue will increase by R20.3 million in the 2020/21 financial year.
Water tariffs will increase by 5% in the 2020/21 financial year. The increase of 5% in tariffs is expected to generate additional revenue of R10.9 million, from R179.6 million in the current year to R190.5 million in the 2020/21 financial year. The revenue figure of R190.5 million is the net of the cost of free basic services of R6 million in respect of water as required in terms of the Budget and Reporting Regulations.
Refuse removal tariffs will increase by 5% in the 2020/21 financial year. The increase of 5% in tariffs is expected to generate additional revenue of R12.4 million (14.9%), from R83.4 million in the current year to R95.8 million in the 2020/21 financial year.
Property rates tariffs are expected to increase by 5% in the 2020/21 financial year, while the impermissible amount will be remain at R85 000. The increase in the property rates tariffs is expected to generate additional revenue of R28.3 million (8.9%), from R318.1 million in the current year to R346.5 million in the 2020/21 financial year. The revenue figure of R346 million is net of the rates rebates of R49 million as required in terms of the Budget and Reporting Regulations.
Sanitation tariffs will increase by 5% in the 2020/21 financial year. The increase of 5% is expected to generate additional revenue of R6.7 million (5.9%), from R111.9 million in the current year to R118.6 million in the 2020/21 financial year. The revenue figure of R118.6 million is net of the cost of free basic services of R10.7 million in respect of sanitation as required in terms of the Budget and Reporting Regulations.
Madam Speaker, the following list of capital projects will be implemented over the medium term by the municipality.
R1.5 million will be allocated for the construction of ablution facilities in all cemeteries.
R300 000 will be set aside for the construction of Admin Building at Fort Amiel Museum
R50 000 will go towards the purchasing of Art works.
Madam Speaker this is a thorny issue which we must be addressed and put to rest today. We want to build an environment and terrain which is conducive to all our residents. The issue of roads has been a long outcry from our community. We’ve witnessed the difficulties faced by the old and young who have had to walk on muddy, dirty and dusty roads, in the rain and scotching heat. Today we are pleased to announce that this municipality will put an end to all these difficulties by constructing the following roads for the 2020/21 financial year:
Construction of MF18 and MF19 Roads will cost R3 000 000
Construction of MF 69,7 , 10 will cost R3 000 000
Construction of MC13 will cost R3 000 000
Construction of OB 1 Link Road will cost R4 000 000
Construction of OA27 will cost R2 500 000
Construction of H39 Bus Road and Street Lighting will cost R6 000 000
Construction of MF55 Road will cost R4 132 000
Construction of MD35 Road will cost R2 661 000
Construction of OA103 Road will cost R2 739 000
Resealing of Roads Newcastle Residential Area will cost R2 500 000
Resealing of Roads Newcastle West will cost R3 500 000
Resealing of Roads Madadeni will cost R2 000 000
Resealing of Roads Osizweni will cost R2 000 000
Construction of Speed Humps will cost 2 000 000
Madam Speaker, our goal and vision is to ensure every household has access to clean water and sanitation, therefore the municipality will implement the following projects in a bid to address improved access to basic water and sanitation.
The construction phase for the upgrade of Madadeni Waste Water Treatment Plant will cost R16 000 000
The construction phase of Viljoen park Bulk Water and Sanitation will cost R8 000 000
Blaauwbosch Bulk Water Supply will cost R9 000 000
Provision of Basic Waste Supply (P46,WARD16,12,24) will cost R6 000 000
Madam Speaker, we are aware that our municipality has a water loss of 52% due to aging infrastructure, and illegal connections. We are therefore implementing the following projects to ensure that water loss will be reduced by at least 2% per annum.
Pipe Replacement and Upgrade will cost R10 000 000, this project is intended to reduce water loss.
Osizweni Water Pressure Management System will cost R10 000 000, this project is intended to reduce water loss.
Madam Speaker, the municipality intends on developing the medical precinct for Newcastle and has set aside the budget for the installation of the following projects:
Construction of the road which will cost R 6 834 000
Installation of Storm water which will cost R 3 884 000
Installation of LED Street Lights that will cost R 600 000
Installation of Water infrastructure will cost R 805 000
Installation Sewer Services that will cost R 910 000
Installation of an electrical Substation that will cost R 2 070 000
Madam Speaker, we are aware of the high unemployment rate in Newcastle and therefore we plan on creating 942 EPWP jobs, “sifuna ukwakha amathuba emsebenzi”. In an effort to improve the lives of our community, the Municipality will also ensure that the following projects are completed by June 2021:
Construction of 741 new houses.
These will be built in Charles Town, H39 and Siyahlala La…
Transfer of 100 title deeds.
The release of 25 residential sites for sale.
The installation of 460 VIP toilets.
The electrification of 500 households.
The connection of water and sanitation in 741 new households.
The re-graveling of 6km of road.
The finalisation and submission of Environmental Impact Assessment Report for the establishment of a new Cemetery.
The finalisation and submission of the Environmental Impact Assessment Report for the establishment of a new Landfill Site.
In conclusion Madam Speaker, it gives me great pleasure to table the 2020/21 budget and I would like to conclude with the following quote, “Excellence is never an accident. It is always a result of high intention, sincere effort, and intelligent execution; it represents the wise choice of many alternatives – choice, not chance, and determine your destiny” – Aristotle…
I THANK YOU!
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