RPA’s Oversight Report on the 2021/22 Draft Budget

Bitou Mayor Ousted
April 21, 2021
Locking Up is Hard to Do
May 12, 2021

RPA’s Oversight Report on the 2021/22 Draft Budget

Dear Bitou Councillors,

Bitou’s revenue collection is spiralling into total dysfunction.  Total debtors’ outstanding amount continues to increase; rates, taxes and service charges are not being collected from most of Bitou’s swelling population.  The Municipality itself accepts that the debt is ‘huge.’

Meanwhile, the Municipality is continuously increasing operating cost to the detriment of the cash position.  Without proper funding in a well-managed revenue stream, Bitou will soon be unable to fulfil its service delivery mandate.

The records show that all non-essential expense categories, such as seminars, conferences, professional services, consultants, sponsorships, entertainment expenses are significantly over spent, and essential costs such as maintenance and engineering services are significantly under spent. The Municipality is increasingly being used to serve those who run it, not those for whom it should be run.

Please weigh your decisions as to where you allocate budget against what the poorest of the poor or just the ordinary citizen in Plett would want you to do with the available money.

 

For example, would somebody who earns a salary too large to qualify as indigent and who consequently has a huge outstanding debt to the municipality, and as a further consequence now pays a punitive electricity rate, think it is a wise decision to spend R800,000 on Christmas Festival lights, or R195,000 on planning a History Festival, or literally millions on fencing?  Or providing a fancy car and limitless and uncontrolled use thereof to the mayor?  If Mr/Mrs Plett in the street would not think it wise, you must NOT do it.

We encourage you to not approve this budget as is and to put the delivery of services to the residents of Bitou as your top priority; produce a service delivery focussed budget in its place.

Our comments and suggestions follow:

 

1.         Bitou is spending R13 million on EPWP workers; Bitou receives a grant for R990,000, and provides the balance from its own funds.  (p 14 says R3.1m, and p 27 says R13m. We know it was over R10 m last year, and being an election year it will increase, so we believe the second figure.)
It is not sustainable. Knysna receives an EPWP grant of R1.118m and does not subsidize beyond that. The Auditor-General report published at the back of the Draft Annual Report did an audit on a small sampling and found irregularities (ghost employees).   Bitou has 560 employees and 400 EPWP workers. Does Human Resources have the administrative capacity to effectively recruit, coordinate, provide uniforms, transport, supervise and compensate that many daily workers?  The entire project must be re evaluated. Importantly you must ensure that the benefits are going to the right people, the poorest of the poor and NOT connected tenderpreneurs, and the budget must reflect that.  Also, p 27 says the shortfall will be taken from the capital projects budget…that is a blunder.

2.         Bitou is increasing operating expenditure by R170 m over the next three years, even though its collection rate is down to 85% and its household debt continues to climb.  Knysna’s operating expenditure is basically flat.  Can Bitou’s proposed budget be funded from the expected income?    (p 15)

3.         Bitou has an 85% collection rate; Knysna has 91%.  Do the two towns ever compare “best practices?”  Why is Bitou’s so much lower?

4.         In the section on Employee Cost (p 21) there is a category of “Other” in the amount of R276 million.  That is a very big unspecified bucket.  It is one-third of the total operating budget and it is unaccounted for.  How much is being budgeted for bonuses, payment in lieu of leave, overtime, bursaries for employees, bodyguards, personal security for mayor and deputy, travel, staff parties, etc.?  Please provide details.  On the face of it, increasing the operating budget while cutting the capital budget is not even rational.

5.         The capital budget is inadequate for the regular replacement of the aging infrastructure in its present state.  Of the Water Distribution budget, pipe replacement is a meagre R2 million in 2021/22 only — and that is all!  A rule of thumb is 6% minimum of revenue (electricity, water, etc) should be allocated annually for maintenance/upgrade of infrastructure.

 

Capital budget

2021/22

2022/23

2023/24

Electrical and Mechanical Eng services

R9.1 m

R9.9 m

R9.2 m

Roads

R30 m

R10.8 m

R5.9 m

Waste water treatment

R17 m

R29 m

R10 m

Water Distribution

R15.6 m

R14.7 m

R13.5 m

 

6.         Revenue from fines/penalties in 2020/21 was R199,000, versus the original budget of R37 million.  A massive discrepancy in anybody’s language. It is forecast to be R37 million in 2021/22.  Has the relevant official explained this drastic dip in 2020/21 and been held accountable if at fault?  (p 21)  Was the fines service company, TMT Services and Supplies (Pty) Ltd paid in the last two years, and if so, how much each year?  Why was there a nine-month gap, the apparent reason for the loss suffered by the municipality, where no service company was appointed?

7.         Contracted services in 2021/22 are budgeted at R113 million.  This is way in excess of National Treasury Guidelines of 6%. (p 21)  With capital projects shrinking, why do we need all these contractors and consultants?  And why do you allow over R13 million in Overtime payments?  Allow overtime for essential services only, and allocate the overtime allowance to capital projects.   (It has been reliably reported to us that municipal employees are providing garden services after hours and on weekends with municipal vehicles and equipment and in full municipal regalia. It could be that this contributes to overtime as well…)

8.         Expenditure category of OTHER in the amount of R56 million. (p 23).  Please provide details.

9.         The Electricity tariff is increasing by 17.8%.  How will the average person, let alone the poor afford that?  Knysna’s electricity is increasing by 14.59%.   This needs to be URGENTLY re-evaluated.

10.     R420,000 is paid to ward committee members.  The policy says only members who attend the meetings should be paid; enforce it!

11.     3% of Bitou’s operating expenditure is for the Office of the Municipal Manager.  R45 million.  Please give details of what that includes. (p 34)  We noted that Legal costs increased from R8 million to R13 million, which we know includes unmeritoriously defending perks such as excessive salaries, illegal mayoral vehicles, and an illegally appointed municipal manager.  Based on that we are concerned that decision taking and advice on this front needs scrutiny and re-evaluation and that to simply continue increasing budget without careful consideration will take the municipality ever further down the slippery slope to total dysfunction.

12.     The municipality has budgeted R800,000 for new Christmas festival lights over the next two years; R550,000 on office aircons,  R820,000 to upgrade the Customer Care office (p 42, 43 and 45).  This kind of expenditure is frivolous at best and wasteful at worst.

13.     Parks & Recreation dept. budgeted R434,000 on the Qolweni Cultural Village.  Cultural villages have been tried and failed in Plett.  (p 44)

14.     Upgrade of Harkerville community hall is budgeted at R3.5m over the next two years.  Surely it can be done for less. That’s the price of a new upmarket house!  (p 44)

15.     Municipal Land –  R2.1m on various properties, including the aerodrome fire sub-station which we already paid for once, but the contractor ran off without finishing the job; were they ever arrested? (p 44).  How much of this budget is for more fencing?

16.     IT Department: R1.3 m over two years for laptop replacements, R518,000 for new users, R452,000 for spare laptops to use while servicing their own.  (p 45)  It makes no sense and is a huge red flag and every responsible councillor should be concerned. An indepth investigation into the situation and provision of laptops to staff must be done before this kind of budget is allocated.

17.     Bitou pays its councillors R3700 pm as a cell phone allowance; Knysna pays its councillors R3400 pm.  Do councillors use it all?  There would be an annual savings of R46,800 if we matched Knysna. We know it has been practice for councillors to allow themselves the maximum allowable amount. We believe the time has come that a study is done to determine exactly how much of the allowances are actually needed and used by councillors for service delivery and that the budget be structured accordingly.

18.     Abolish the Mayor’s Grants-in-Aid fund for a savings of over R4 million pa.  National Treasury frowns on the fund and strongly discourages it because of its potential for financial misconduct.  The Forensic Investigation Report commissioned by MEC Bredell called for dozens of disciplinary and criminal actions stemming from payments to Grants-in-Aid beneficiaries, particularly in the mayor’s office.  It is abused and that temptation must be removed. Council must adopt the National Treasury savings measures as policy and budget accordingly.

19.     Security expenditure is a concern. The total cost is enormous (but unknown) when one looks at it in totality. Several private operators, municipal law enforcement, training, equipment etc etc; there are clear indications that there is often a duplication of service. The manner in which the tenders are structured is inimical to proper control of the budget. Once again blindly budgeting more and more money every year only serves to bring us closer to the morass of dysfunctionality that will result in no security at all.

Our letter from January asking you to consider cost reductions is attached.  We trust that you already gave this careful consideration in your personal preparations. We believe that we speak for everybody and not just our members when we ask you again, that as our elected representatives, you budget for the people of Plettenberg Bay, to provide us with reliable up-to-standard services at a cost that is sustainable in the long term, realistically priced and affordable to ALL of us. That and nothing else must be reflected in the budget you are drawing up for us and in everything else you do and every other decision you take on our behalf.

We wish you strength in that task.

 

Kind regards,

Peter Gaylard

Chairman

cc: Municipal Manager

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