Newcastle Mayor tables 2021/2022 budget, with an increase in tariffs on the cards

Newcastle Mayor tables 2021 2022 budget with an increase in tariffs on the cards
Electricity tariffs are expected to increase by 14.59%. However, Cllr Dr Mahlaba stresses, "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 will be submitted by the municipality to NERSA."

Newcastle Mayor, Cllr Dr Ntuthuko Mahlaba took centre stage on Sunday night, 2 May 2021, when he delivered the Newcastle Municipality Budget Policy Statement.

Under the theme, The year of Charlotte Maxeke: promoting human rights in the Age of COVID-19, the Municipality’s Budget Policy focused not only on addressing the issues of inequality but also looked at enhancing Newcastle in the upcoming year. In his opening, the Mayor states he has observed that the Coronavirus pandemic has exposed every existing inequality imaginable globally. “However, with the vaccine program, we now tither and wait in anticipation for a COVID-19 free world.” Furthermore, he says, “I cannot emphasise enough of the catastrophic economic impact that Coronavirus has inflicted upon all of us. Our livelihood has certainly changed, and unfortunately not for the better.”

Despite the challenges posed by the pandemic, Cllr Dr Mahlaba stresses that as a caring, listening and people-centred government, the Newcastle Municipality has not slumbered in its efforts to rebuild our local economy. He explains, “We continue to attract potential investors to see Newcastle as the preferred business destination. We also continue to agitate for the improvement, betterment and dignified life for all.”

While emphasising, the municipality was determined to provide service delivery to Newcastillians continuously; the Mayor further said the municipality has also been dedicated to eradicating corruption within the government entity. Cllr Dr Mahlaba elaborates, the municipality has been unwavering in its commitment to fighting corruption, malfeasance, maladministration, incompetence and has been extremely vocal in its stance to promote consequence management at all costs. “Last year, we called upon residents to blow the whistle whenever they are confronted or witnessed any form of corruption. Through law enforcement agencies, such as the South African Police Services and the Hawks, we have sounded the clarion call and extended an impassioned plea for residents to report officials, staff or service providers who are engaged in any form of corruption.”

To date, the Mayor claims the municipality has several cases in court where the municipality has swiftly acted against guilty parties. “Through our vigorous efforts, we have nabbed a municipal employee who tried to defraud the municipality of millions of rand. Through fair and just disciplinary processes, we have dismissed two senior officials for various transgressions. Our consequence management strategy is another clear indication that we are sincere about fighting crime, and we are closing ranks.”

When looking at the financial situation of the Newcastle Municipality, Cllr Dr Mahlaba points out that when the current administration took over, its first objective was to implement a master plan to turn around the fortunes of this municipality. “Firstly, a situation analysis was undertaken where we assessed our finances, infrastructure, human resources and capital program. Our priority was to service our debt with Eskom which was sitting at over R200 million. To date, we are servicing that debt and have managed to reduce it by over R35 million rand.”

Currently, the municipality’s debtor’s book is sitting at over R1.7 billion. However, plans are apparently underway to implement a debt collection strategy to ensure the municipality recoups the large outstanding debt.

Moreover, in September 2020, the municipality undertook a special adjusted budget which was decreased by R400 million. The Mayor highlights, “We embarked on an aggressive cost-cutting campaign; including cutting unnecessary perks for officials, cutting cell-phone allowances, cutting unnecessary spending and eventually, we drastically reduced unwarranted expenses. The municipality further cut overtime in some areas thus saving the municipality at least over R5 million a month from unwarranted overtime. In the past we have had instances where employees were claiming over 100 hours of overtime, whilst others claimed to have worked 24 hours a day. Through a thorough program, we were able to detect these municipal staff who were defrauding the municipality. Such innovative systems to safeguard the financial affairs of this institution make this municipality a trailblazer.”

Focusing on addressing issues, the Mayor highlighted several milestones the municipality achieved during the past financial year. These includes:

  • The municipality has been given the go-ahead and approved to construct 560 community residential units valued at R4 billion. This project will lead to the creation of over 1000 jobs.
  • The municipality has been approved to construct 1 256 Social Housing Units valued at R6 billion, which will also create over 100 jobs.
  • The municipality was able to negotiate with UNISA to establish a regional university campus that will cater to Newcastle and surrounding areas. The university will lease a municipal building for a period of three years, with the option of purchasing the building thereafter. The Mayor said, “We understand that education is a priority for the youth of Newcastle, and this will give them easy access to the institution of higher learning.” For this reason, the municipality, this year, awarded 109 students with bursaries in order to further their education at a tertiary level.
  • Furthermore, the municipality has approved the construction of six new roads in Madadeni, Osizweni and Blaauwbosch.
  • Again, the municipality has obtained approval from the Department of Mineral Resources and Energy to speedily electrify five areas that never had electricity before, namely Siyahlala-la, Charlestown, Ingogo, Normandien and some areas in Blaauwbosch. 
  • 3,4 kms of roads has been resealed in Newcastle.
  • 70 speedbumps will be installed by 30 June 2021.
  • The municipality was recognised for producing one of the best Integrated Development Plan.
  • The municipality was rated as having one of the most improved Integrated Development Plan in KwaZulu-Natal.

When looking at the current budget, the total consolidated budget for the 2021/ 22 financial year is R2.6 billion, which has been developed with an overall planning framework including the programmes and projects to achieve the maximum strategic objectives of Newcastle Municipality as per the IDP.

Furthermore, it seems Newcastillians can expect to fork out more this upcoming year due to an increase in tariffs.

Electricity services

Electricity tariffs are expected to increase by 14.59%. However, Cllr Dr Mahlaba stresses, “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 will be submitted by the municipality to NERSA.”

With the tariff increase, electricity revenue is expected to increase by R90.0 million (15%) in the 2021/22 financial year. Cognisance should also be taken that this percentage increase of 14.59% is way above the projected inflation rate of 3.9%. However, this increase is based on the NERSAs tariff approval for municipal tariffs. The revenue figure of R710.1 million is also net of the cost of free basic service of R8.5 million regarding electricity as required in terms of the Budget and Reporting Regulations.

Water services

Water tariffs are expected to increase by 3.9% in the 2021/22 financial year. The increase is expected to generate additional revenue of R6.3 million (3%), from R187.5 million in the current year to R193.9 million in the 2021/22 financial year.

The revenue figure of R193.9 million is net of the cost of free basic services of R10.3 million in respect of water as required in terms of the Budget and Reporting Regulations.

Refuse removal

Refuse removal tariffs are expected to increase by 3.9% in the 2021/22 financial year. The increase in tariffs is expected to generate additional revenue of R2.8 million (3%), from R92.7 million in the current year to R95.6 million in the 2021/22 financial year.

Sanitation

Sanitation tariffs are expected to increase by 3.9% in the 2021/22 financial year. The increase is expected to generate additional revenue of R3.1 million (3%), from R116.2 million in the current year to R119.4 million in the 2021/22 financial year.

The revenue figure of R119.4 million is net of the cost of free basic services of R15.1 million in respect of sanitation as required in terms of the Budget and Reporting Regulations.

Property rates

Property rates tariffs are expected to increase by 3.9% in the 2021/22 financial year, while the impermissible amount will be remaining at R85 000. The increase in the property rates tariffs is expected to generate additional revenue of R13.6 million (3%), from R348.8 million in the current year to R362.4 million in the 2021/22 financial year. The revenue figure of R362.4 million is net of the rates rebates and indigent benefit of R79.1 million as required in terms of the Budget and Reporting Regulations.

Additionally, Cllr Dr Mahlaba added that the municipality will be conducting several projects for the 2021/22 financial year. The Mayor stated, “This financial year, we will rejuvenate and implant a spirit of a dedicated public servant. As instructed by the late Charlotte Maxeke who said that everything we do, we do for the people and not ourselves. It is for this reason that I implore the residents of Newcastle to work with us as we roll out the following projects for the 2021/22 financial year.”

  • The municipality plans to construct and complete 300 new houses connected with water, sanitation, and refuse removal.
  • 624 new household connections to electricity.
  • The municipality has prioritised its roads projects. The Mayor explained, “We are aware of the importance of resealing of roads, which will gradually ensure that potholes become a thing of the past.”
  • The municipality has also undertaken to complete a series of projects during the 2021/22 financial year. These include:
  • 100% implementation of the water maintenance plan
  • 100% implementation of the electricity maintenance plan
  • Supply of 11500 households with free basic water, sanitation, refuse removal and electricity in terms of the Indigent Policy.

With the budget speech highlighting the increase in tariffs while focusing on developing Newcastle, what are your thoughts? 

Share your views in the comment section below.

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