Disposal of municipal propertyMarch 28, 2023
AGM MinutesApril 4, 2023
And I thank you, on his behalf, for the many letters of appreciation he received from you for his years of service to Plett and the Ratepayers’ Association. It will be a hard act to follow.
I believe that the need for community engagement in Municipal affairs and Municipal oversight has never been more critical.
As with state-owned assets which are plagued by state capture and maladministration, fraud and corruption – “municipal capture” is an ever increasing threat.
Ramaphosa in his SONA address this year acknowledged that 163 out of 257 municipalities are dysfunctional or in financial distress due to poor governance, ineffective and, often times, corrupt financial management.
The reasons for broken municipalities are varied but tend to fall into 5 buckets;
1. Lack of skills – both capacity and competence coupled with poor people management, especially performance and consequence management;
2. Irregular, wasteful and unauthorized expenditure – R26 billion across all municipalities last year;
3. Supply chain management and tender processes certainly not driven by “Value for money”;
4. Poor revenue management and collection – poor IT systems and controls;
5. Lack of strategic planning especially lack of investment on infrastructure and inadequate repairs and maintenance.
Bitou faces many of these challenges and these are the issues that occupy most of the Association’s time.
• We are in financial distress;
• Our cash reserves have been depleted;
• Our infrastructure is aging and under stress, especially under the population growth we are experiencing;
• Our SCM processes and tenders leave a lot to be desired;
• Indisputable that we have inadequate performance and consequence management in place.s
The Ratepayers’ Association’s role is to promote the interests of every resident of the entire Bitou community.
We do this through:
• Oversight – by holding the municipality accountable for efficient service delivery, strict financial controls, and effective and efficient use of ratepayer funds;
• Adding value wherever possible – we can tap into the expertise and knowledge in the Association and broader community and contribute to strategic planning (infrastructure);
• Broadening our representation across the entire community.
Oversight is by its very nature, challenging.
• it is our job, our collective job, to question and probe;
• to provide some checks and balances.
This will naturally lead to tensions between the two parties. Especially so, when some would rather not have a light shone on what they do.
The Constitution affords us the right to; Transparency, Responsiveness and Accountability from our local government.
It’s fair to say upfront that we are not happy with the level of transparency, accountability or responsiveness from our council.
If information is not forthcoming or we get incomplete answers, we continue to demand clarity and the facts, failing which, we don’t hesitate to escalate to Provincial government, and even the Auditor-General. We also resort to a PAIA (Promotion of Access to Information Act) to get it.
But I must stress we make every effort to keep an open dialogue with the Mayor, Municipal Manager and their senior team and appreciate their willingness to meet with us, which they are happy to do so on a regular basis.
The current financial position of the municipality is especially concerning and has been a top agenda item.
Throughout 2022, we were really hopeful that we would see greater financial disciplines after the previous administration. Unfortunately the financials have gotten progressively worse. In October last year, the municipality was facing insolvency and an inability to cover normal operating expenses. To their credit and the efforts of the acting CFO Felix Lotter, a Voluntary Financial Recovery Plan was put together – it was a comprehensive report that showed a good understanding of the driving factors, but it was dominated by longer term initiatives and reviews of systems and controls. In our opinion it lacked a sense of urgency around the need to have more aggressive shorter term financial objectives. It also did not call out an implementation team and a project management plan that is so critical for a financial turnaround of this magnitude.
We requested their consideration of a shorter term plan to focus on revenue enhancement and cost reduction initiatives to mitigate the seriousness of our financial situation. We also required more clarity on accountability.
We never received a response to this nor have we seen any progress report or achievements over the last five months. Even more frustrating was the acknowledgement that substantial efficiencies, cost reductions and opportunities to recover fraudulent expenditure did not exist. In subsequent meetings it is clear that municipal processes are not geared to quick and decisive action.
This was the background to our objections to the R38m they were proposing. As you now all know, a decision has been taken to progress with a somewhat reduced loan of R35m to be taken over 10 years at 12.5% interest rate, which will cost us over R60m over the 10 years, when all is said and done.
It was not that we disagree with the need to invest money into critical infrastructure projects, but we are of the belief that with financial disciplines in place, closer scrutiny on tender awards, decisive cost reductions, and recovering more aggressively fraudulent expenditure, then this loan would have been substantially less or not required at all. In addition, we face the prospect of higher rates and tariffs being passed onto us all, based on an inefficient cost base.
Some of the other challenges we have been dealing with;
Poor people management . Hiring and firing disciplines, lack of performance management and consequence management are costing us a fortune. This lack of accountability has been a major complaint by the Auditor-General about Bitou.
• You may have heard recently that we may have to end up paying out R5m for the balance of a 5 year contract of a dismissed Director. Proper HR management could have avoided that.
• There are dozens of employees facing disciplinary charges, but the process is painstakingly slow and in many instances has not been completed. We have evidence of employees on suspension at full pay , one for almost 2 years waiting for a disciplinary hearing. Others who have been accused of various irregular activities are still employed. So many issues not being finalized – fuel card fraud, housing fraud, not to mention the long list of fraudulent activities from the previous administration
• More recently we faced the prospect of a new CFO who we believed lacked the necessary track record, skills and integrity required by Bitou to implement a complex financial turnaround. We applied significant pressure as you all know and ultimately he ended up not taking the position. The council is nearing the end of a second round of search for a CFO. We have requested clarity on the recruitment company and who sits on the selection panel but received no response. We have asked for observer status, on the hiring of the new CFO and in fact for all senior appointments – something we believe we have a right to. But there has been pushback from the municipality.
The supply chain management department, which administers tenders, also remains a significant concern. You will remember a long list of concerns we raised in one of our reportbacks to you
• There are too many questionable tenders awarded;
• too much use of trading companies rather than buying direct from retailers at best prices;
• too much hiding behind bid committees.
• cost overruns on tenders is staggering, and whoever is signing off on jobs is not being held accountable.
We have also been critical of the outcomes from MPAC committee – The purpose of the Municipal Public Accounts Committee is to strengthen the oversight in the municipality and to investigate unauthorized, wasteful and irregular expenditure and recommend disciplinary action and most importantly to recover funds….and believe me, there is no shortage of issues that need to be investigated, but we are yet to see anything of significance come from this committee! And certainly no recovery of funds.
We have a top heavy organizational structure – although this is acknowledged, it is our view that there are significant opportunities to address the structure and wrong people in positions. Municipal processes undoubtedly hinder performance and consequence management. Additional appointments continue to add costs to an already inefficient organizational structure.
On the town planning front – you will have seen recent communication on the Councils intent to dispose of 17 properties. Some of those properties are open public spaces which need to be cherished and maintained. It was published on March 16 and called for comments within 14 days which is totally inadequate for the public participation process and for a well considered response. In addition we have not been given sufficient information on these properties. We have asked the Mayor and MM to allow for a proper and comprehensive participation process and to extend the deadline as well as give us more information regarding the entire process. Our request has resulted in an extended notice period, and a bit more information.
• When our efforts for accountability and good governance fail, we will not hesitate to resort to the legal system.
• Martin Brassey will take you through our legal cases as well as tell you about an ombudsman proposal we have given to the Municipality.
STRATEGIC AND FORWARD THINKING INITIATIVES
In addition to our oversight function, we try to add value as broadly as possible. We have access to a deep knowledge base and expertise (within the Association and Bitou community) ranging from financial, engineering, waste management, legal and labour affairs.
One of our more significant efforts this last year has been a number of comprehensive reports and recommendations on the impact of our population growth in Bitou on critical service delivery and infrastructure requirements that cover water, electricity, waste, sewerage and town planning.
We are in the process of sharing these with the Mayor and MM as well as with our members shortly, but suffice it to say that we have identified significant pressure points and bottlenecks across all of these critical areas and have made a number of recommendations as to what can be done.
We sincerely hope that Bitou will take advantage of the skills and experience that resides in Plett and together we can devote attention to some longer term thinking and future planning.
On the positive side we have seen stronger signs of cooperation and progress on the solid waste side, and we hope submissions for new vehicles and equipment get budgeted. Our concerns remain however around the time is takes to get things done and the ongoing problems of skills and poor management.
Bottom line, there are efficiencies to be achieved across all service delivery areas and unless these are addressed with urgency, ratepayers will ultimately end up paying higher rates to cover those bloated costs. They need to attend to the root causes, and not pass the cost of the inefficiency to the end user.
Broadening our Representation
This is a key strategic objective. We made the decision to have a “Supporter drive” which consists of broadening our feedback, newsletters and communications to a much broader base. In addition there was a need to inform and educate communities about the purpose and value of the RPA.
We have created an apolitical community forum in Wittedrift which includes Green Valley and now looking to extend that to Harkerville.
We are also looking to get representatives from all wards to meet with our Exco so we can better understand their needs and where possible to act on their behalf. Much more work needs to be done but solid progress nevertheless.
Today we are extremely lucky to live in a wonderful town. And many of you who come from other municipalities marvel at the cleanliness of Plett and the service delivery we enjoy.
As a Ratepayer Association we acknowledge this and do not take this for granted but our focus has got to be on tomorrow, the future and the sustainability of service delivery across all communities.
We and the municipality, can learn from a number of municipalities who have proven what can be achieved in a short time period. Cape Town led by Geordin Hill Lewis and Umgeni in KZN by Chris Pappas immediately come to mind. They have shown us that with – strong leadership and management focus, a sense of urgency, the right resource – capacity and competence, holding people accountable and imposing consequences for sub standard performance – Service delivery can be dramatically improved for the entire community, clean audits and financial health can be achieved in a very short period of time.
Most critical is that we build up again the necessary reserves for infrastructure investment but this must come from fiscal disciplines and better management, not further loans and rates and tariff increases.
We would love to be able to reflect on more tangible achievements over the last year. However, we continue to engage with the Mayor and his team, and our oversight, questioning and probing forces debate, discussion and I believe reconsideration across a number of critical areas.
Our meetings don’t always result in agreement but it raises awareness and it is clear that we are watching!
These are in themselves solid achievements, without which, things might be very different.
We thank each of you for your membership and support to enable us to do our work.
I would like to thank each and every member of the EXCO, who selflessly devote their time and efforts to the Association. But the biggest appreciation I would like to extend is to Peter Gaylard, our chairman for the last 4 years and active member for the last 15 years. We thank him for his tireless efforts and for the many contributions made to making our wonderful town what it is today. Let’s give Peter and his wife Mary a big round of applause.
Many thanks for your time and support.