The DA has rejected the council’s proposal to incur an additional R239 million loan and voted against the proposal at the October Special Council meeting. They deem such a loan unaffordable.
The proposed loan was opposed by the DA on the basis that the council could not provide a plan to curb the current rate of non service delivery expenditure, ensuring that the municipality would remain sustainable throughout the financial year.
The municipality is unable to pay Eskom within the agreed time frame owing to consistent cash flow shortages. In addition it is budgeting for a deficit of more than R40 million following a shortfall of R63 million in the preceding year.
“Cash resources are being depleted at an unsustainable rate,” says councillor Dennis Pretorius, DA spokesperson for Finance.
The DA is convinced that by incurring additional borrowing, the high risk and unsustainable situation in Mogale City will swell due to an already depleted cash reserve. The municipality will not be in a position to effect the loan repayments. Both the National and Provincial Treasury have advised against this loan.
The DA fully supports economic development in Mogale City and totally agrees that infrastructure projects should precede development and would unlock economic progress. The upgrading of water and electrical assets and roads is necessary but funding should be sourced elsewhere.
“Because we are not convinced about Mogale City’s ability to repay this loan, we cannot support it with a clear conscience,” stated DA Chief Whip councillor Matthys van Tonder, when he called for a vote on the matter. In the ensuing vote, the DA and opposition parties Freedom Front Plus and Cope were outvoted by the ANC.
“It is regrettable that the municipality finds itself in this position. If only the ANC had planned properly in the past 20 years, resisted the nice-to-haves and political agendas and focused on using funds to embark on much-needed projects to pave the way for development. A properly funded and managed repairs and maintenance programme also would have lengthened the life span of our assets, making it possible to allocate financial resources for the establishment of new infrastructure as a foundation for development,” councillor Lynn Pannall adds.
The DA urges the council to rein in its spending and avoid placing the municipality in an unmanageable financial cul-de-sac.
The DA Caucus Leader councillor Christo Peyper, summarised the DA’s position.
“We will continue to support sustainable development, provided that operating expenditure does not exceed income, in order to build up cash reserves to ensure sustainability.”
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