Freedom Front Plus
Freedom Front Plus

FF Plus rejects Newcastle Municipality’s budget

The FF Plus in the Newcastle Local Municipality has voted against the Municipality's proposed budget for 2020/21 because costs should be cut and revenue must be increased to make up for the projected operating deficit of R401,8 million, which is the result of the Covid-19 pandemic.

The proposed budget was also rejected by the KwaZulu-Natal Department for Cooperative Governance and Traditional Affairs (COGTA) because the Municipality has tabled an unfunded budget. Over the last few years, the FF Plus has repeatedly pointed this out and rejected the budget seeing as there was no attempt from the ANC's side to rectify the problem.

The biggest concern is that the current asset-liability ratio is 0,85:1 while it should be more than 1,5:1 for a budget to qualify as being funded. So as it stands, the budget is currently not funded.

Newcastle's general growth and development depends greatly on its future economic growth and development and with an unemployment rate of 31,8%, something must urgently be done to address the situation. In this regard, the focus must be on creating and maintaining local industries so as to create more job opportunities. The Drakensberg Distillery on which construction has been completed and that is ready for production, cannot start operating due to a lack of initial capital.

The constant water losses on the east side of Newcastle, that add up to about 40 to 46% of the total water supply from Uthukela Water, are a great cause for concern. Action must urgently be taken to reduce these water losses to 18%, which is the national norm.

The liquidity of Newcastle's budget has been under pressure over the last few years. The proposed budget will also be under immense financial pressure, specifically when one takes the impact that the Covid-19 pandemic may have on consumers' ability to pay for services into account. It is estimated that unemployment will increase and that revenue, from the consumption of electricity and service delivery, will decrease accordingly.

The FF Plus is also concerned about the Eskom account that has escalated over the last three years despite repayment agreements that the Municipality negotiated with Eskom on various occasions. The Municipality still has not paid the outstanding amount to Eskom even after a court order was issued.

In the context of the abovementioned issues, the FF Plus cannot support the Municipality's proposed budget for 2020/21 and insists that drastic changes must be made to make provision for the expected decrease in revenue and for vital savings on expenses.

Contact details: 082 388 3000‪



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