Shocking Financial Revelations & Questions in Knysna
Ian Stewart is another whose questioning the state of Knysna’s finances. Considering his credentials, people need to listen to what he has to say. More importantly, the Knysna Municipality needs to start answering.
Ian is a chartered accountant and proprietor of Outeniqua Financial Services. He was also the accountant for the original Knysna Ratepayers’ Association. Ian has the interest of Garden Route towns at heart and has kindly given permission for the re-posting here of his letter to Knysna’s residents:
A Summary of Knysna’s Financial Budget… and Other Funny Stories!
The following expose’ has taken quite some time to put together. While it is “longish”, it is important for the residents to be appraised of what is going on behind closed doors in the ivory towers of municipal power. Please sit back when you have a chance and read this. Comments would be appreciated.
Dear Knysna Residents,
Election Time is near. You should be hearing from those political animals that promised you the earth years ago and since then I doubt if you even got lip service! But now they need your vote to keep them in power so that they can um- err- well- you know- keep doing what they have been doing since they last needed you… filling their pockets with your money is one thing they do well. Services?? No way – fix your own potholes (as per a circular sent out by the Ratepayers Association).
So maybe you need to print this mail, take it home and, over a cuppa or beer, have a chuckle. It is not that funny really but you must try to find the humour wherever it may be hidden.
As an accountant in Knysna, I see from client books that things are very tough out there. You don’t have to be a rocket scientist to figure out that this town is severely, financially depressed. Take a drive down the main road and CBD roads and you see empty premises. The state of roads in the town speaks volumes too. We really have a very tired town that sorely lacks maintenance. The industrial area is depressed financially too as hordes of empty buildings testify.
The MTREF medium term (something or other) Budget
Now we move on to the budget for the town as prepared by the municipality. How many of you have the faintest idea what it says? How many have bothered to try to find it?
Until now, not even I, as an accountant, had done so for this current budget (I did look at previous years’ when I was fired up then!). I suppose we are all too busy trying to make ends meet. And for those of you who may have looked at the 90 odd page budget before, do you really understand it (other than the commentary amongst the schedules of figures)? I should understand these municipal figures but have to admit I have trouble in doing so. So the non-financial folk out there probably have no chance!!
Lets look at some items in this budget – keep in mind that the town residents and businesses are struggling financially:
1. While a lot of people employed in the real world are lucky to have a job (albeit poorly paid), excessively paid municipal staff (salaries dwarf the private sector) get a 6.85% increase on top of their inflated salaries. They get bonuses too that many in the private sector would love to have. The bonuses for the execs used to be performance related but performance came into question so they changed the rules to make the bonus non-negotiable i.e. they get it whether deserved or not.
2. Knysna has the 3rd highest municipal employee cost per population member IN THE PROVINCE.
3. It is admitted in the budget that “leadership did not not implement effective human resource management to ensure that adequate and sufficiently skilled resources are in place in key finance functions”. Quite an admission – and these directors were on +\- R1m p/a packages.
4. The largest cost that we ratepayers must bear is salaries. A few years ago, while the town was run by the ANC, there was a massive outcry when the salary packages of directors and councillors was exposed to ratepayers via an email that did the rounds. In a little town of 50-60,000 residents, we were all horrified that the directors were on packages of between R900,000 to R1,2m (the latter was the deal for the Municipal Manager). One department manager reported to me that he was livid to find that he earned R500,000 less than his director – and he was the guy that did the work!
5. I have scanned through the various budgets on the municipal website in an endeavor to find the salaries of the top brass and councillors. On page 69, in one year, and 71, in another year, under section 13 “councillor allowances and employee benefits”, it says “refer to annexure 2 supporting table SA22”. There is no such annexure or table to be found! Maybe the current party in power learned not to show us what they earn as we would by peeved that they are all up front at the same feeding trough that the ANC regime were at.
6. A bit of research led me to a controversial blog where some of the salaries are revealed, albeit for years gone by. Lauren Waring (now Municipal Manager) is stated to be on R1,203m (2011/12) R1,016m (2010/11) and Grant Easton R1,311m and R1,162m for the same years. We are now in 2013/14 so their troughs are much bigger, I would think. Seems like there has been no change in power, just different badges! They all end up at the feeding trough with snouts dug in deep!
7. Even though the town streets are lined with empty shops and tough times are evident everywhere. Rates income is planned to increase from R108m in 2009/10, R117m 2010/11, R125m 2011/12, R144m 2012/13 to R152m in 2013/14. And it keeps going to R172m in 2015/16. Now I don’t see big housing developments anywhere soon so who is going to pay these extra rates? The rates obviously need to keep going up to fund the salary bill that obviously has to go up to fund all the assistants to the assistants and advisors and… the massive salaries and increases thereon.
8. Electricity revenue will increase over the same period from R117m to R208m and water R35m to R50m. Talk about getting blood out of a stone?
9. In the real world, we have to live within our means. If your profits are down due to tough times you cut out the frills and go home with less pay. Municipality fills buildings with people way above market related salaries and says to us “you pay” (the old cart before the horse story – we want this money to spend so give it to us). I would have thought that seeing there are less businesses to serve (serve is what they should be doing) there should be a freeze on salary increases as well as on new jobs.
But open any local newspaper and you will find jobs advertised. Costly decorating of municipal offices should be put on hold for a good few years till the roads are fixed and rates and services costs to ratepayers have been reduced.
10. Quote from the budget : Council basic employee costs will have risen by 93% on average by 2013/14 since 2009/10. Why? Who are they serving? Empty businesses and factories! Finance directorate increased by “only” 81%. And the ringer – Executive and Council increased by 116%!! Corporate services by 105%, 100% in Planning and 86% in Community Services. And for this shocking state of affairs they vote themselves bonuses in excess of what the average man in the street earns in a year!
And the budget states “clearly here is a disjuncture either in the number of staff employed or in the grading of the staff… and probably both.” It gets worse. The budget documents says further that, “The question arises as to whether council [i.e.the overpaid beaurocrats you voted in] is over staffed or wrongly staffed and the probable answer is now BOTH” !!!
With tears in my eyes, I cannot believe that these people have the audacity to keep giving themselves increases and massive bonuses and simply tell us to pay.
11. Total income excluding capital transfers is shown at R380,640,000 in 2009/10.
Employee related costs that year were R114,453,000 (30.07% of total income) and councillors R4,302,000 (1.13%).
Now we all know that since then things have been bad and businesses and factories have closed, we have all had to tighten our belts. So why is it that municipality needs :
a) R528,123,000 income this year 2013/14 with R168,789,000 (31.96%) for employee related costs and R6,348,000 for councillors? A massive R54,000,000 increase on 2009/10!
b) And, in 2015/15, R594,789,000 income and employee related costs of R192,385,000 (32.34%) in 2015/16 (R7,158,000 for councillors)? There surely should be a decrease in salaries as there is less work? And as times are tough you scale down on costs surely?
DO YOU SEE the trend? Where is the efficiency/economy of scale? – the less money coming in should mean that the percentage going to salaries should be less. BUT it is growing! Is this suggesting that there is an incentive within municipality that the more they can drain from us the more they can spend on themselves? These numbers say this IS the case.
12. We all know that even though there are all these highly paid execs, they need consultants to also do the work – R12,220,000 in “contracted services” (which I presume is consultants?) in 2009/10 climbing to R20,452,000 this year and planned to be R23,015,000 in two years time. Do we need these R1m plus p/a executives if someone else needs to be called in to do their work? Maybe contracted services is NOT the consultants figure – maybe a contentious item like that is hidden away elsewhere – see below “other expenditure”?
13. And then we come to that nice little hiding place called “other expenditure” which has gone from R131,784,000 in 2009/10 to R210,757,000 in 2011/12 then R125,456,000 in 2012/13 only to drop to R119,149,000 this year (22.56% of total income and we have no idea what this number represents!). I wonder what caused the drop? Less “indulgent” expenses i.e. on themselves?
14. Electricity is a necessity, right? So the profit margin municipality makes is small, right? Guess again. Their profit margin is 30,4% when compared to the bulk price! [See page 49] Granted (no pun intended), the profit margin has decreased from 38.4% in 2010/2011, possibly due to pressure from the National Energy Regulating Body to curb increases. The excuse for large profit margin will be that they need the money to keep rates and services costs increases down! Or maybe the truth is that they need the money to help fund their excessive salary bill and exorbitant, non-performance related bonuses.
Seeing that we are the paymasters of all within the municipality, why can we not be given information that makes sense to the man in the street.
The gobbledegook way that the financial reports are presented is quite amusing – on page 46 there is a table of very finely printed figures called Budgeted Financial Performance (by standard classification) – whatever that means. Under Revenue they show, under a sub-heading, Executive and Council an amount of R6,938,000 budgeted for this year. That sounds like the Execs pay the municipality money? No chance. I really don’t know what that means. In 2009/10 that figure was R10,535,000, the next year R56,626,000 and then R37,772,000. This year it drops to R6,007,000. Why such huge fluctuations? But then I am just an accountant so why should I understand Knysna Municipality’s financial reports? Maybe one of you reading this report can help me understand this.
QUO VADIS? Where to from here?
If you are at all a financially minded person, have internet, know how to log into the municipal website, can wade through the 90 odd pages, and can make sense of it, please correspond with me with your findings. Maybe together we can make sense of all of this? Maybe we are being suckered by the politicians…maybe not?
We need to compare Knysna/Sedgefield with Plettenberg Bay (Bitou) and George. I hear Plett salary bill has shot up too with huge head count increase [Wicked Mike – DA in charge there too]
Why are the salaries of the Directors and Councillors not disclosed like they used to be under the ANC? Is this the transparency and good governance we deserve [Wicked Mike – we were promised it repeatedly pre-election].
The masses Boo-ed Zuma. Is it not time we boo-ed the people running our town into the ground? The DA were opposed to fat salaries that the ANC people were on. What has changed now that they are lined up at the trough?
And what, dear voter, do you intend to do about this?
Yours faithfully,
Ian Stewart
Interesting bedtime read! Almost 7 months have passed and I’m interested to know what has transpired in the last few months? Have you managed to establish a GGRRA?
Ian and Mike, you have my full support ad I am happy that we could trash out any misunderstandings. I am planning to be in Knysna during the week of the 16 January.
Fab. We’ll keep in touch and try set up a date for that weekend. Thanks.
Enrico and Ralph – and others that this was directed to. My apologies. On re reading my comments I can see why Enrico may have got the impression I was implying certain preconditions on the two of them in particular which is most definitely not the case ! I was so impressed with both of your comments on this blog that for once I saw that there may be light at the en of the tunnel. I am opposed to political pressure being directed against individuals who are not dancing to the big political tune. Filling council with political appointees who may not be suited to the job etc.
I am happy with the “best man for the job” requirement. I see a groundswell of goodness in the town bursting to come out. We simply need the right leaders to make this happen. There are a lot of very peed off people in he western cape so it is time for a non political people movement to take control of municipalities to stop the rot.
Ditto!
As we had our meeting, so i met with Ralph 2 days ago and we had the most reasonable conversation we’ve ever had with the agreement that some Knysna issues, with commonalities for all, must be treated as community first and not politics first.
Enrico seems to be of similar mind but we have yet to meet as he’s currently in Paarl but he has promised to share a conversation next time he’s in town. Ian, hopefully you can join.
This attitude applies to ALL in Knysna regardless of race, creed or political affiliation. Let’s get talking and find out what we can agree upon rather than what we disagree on.
PS: http://www.facebook.com/Munwatch – Rustenburg also fed up with local government.
Ian
The issue of politics is very complicated, because it’s all over. In church, at the work place, at school, wherever you go. And what is politics? If I speak about paying a worker a decent wage, or about Pezula or Leisure Island wanting to put booms up to keep people out, or about decent services whole Knysna or about a golfer who spits in the face of a caddie, is that speaking politics.
To remove politics from me is like the thing where people wanted to remove the ANC from Madiba, it can’t be removed. But I, like Enrico can distinguish between party and community politics. Knysna, my home town is important to me and I will play my part to make it a better place for all, black and white.
I will participate in a discussion or forum that are interested in making Knysna a better place. Lets tackle all issues together, corruption at the municipality or unemployment and poverty in the location.
Together we can do more. Let’s learn and put into practice what Madiba stood for.
This is unfortunately true and i appreciate your differentiation. We have to put community politics before party politics. Community politics is what we all have in common.
Ian, let’s set the record straight, I don’t know why you have singled out Ralph and myself, but nevertheless I am a committed member of the African National Congress and I love the place of my birth, Knysna. You must bear in mind that although I am a committed member I am not following the ANC loyally where it is found that it is making mistakes. I for example I cannot defend the President regarding to Nkandla. I am an independent thinker and live for the ideals as set out in the Freedom Charter and of those of our former president, the late Nelson Mandela. Please do not tell me how I must think. I am committed to expose corruption in what ever manner or form. I hear what you are saying regarding politicians and I am not a politician, I am working for my money like you do. You have voted in the last elections and I am not going to ask you who you voted for. Let’s work together to root out this mismanagement in our town irrespective of where we are coming from. I cannot speak for Ralph whom I have great regard as a friend. He must just do the right thing and bring his councillors to account!
I don’t see it as singling out, just a simple request for a general meeting sans party agendas. What i am very pleased to read is your stance on self-thought rather than party thought. That’s the attitude everyone needs to have, not only so that the ANC and DA clean their ranks from within but so that we, as i’ve repeatedly requested, put Knysna first.
He (Ralph) must make sure as provincial leader of the ANC that his councillors up the ante and lift their collective arses for the benefit of all the people o0f Knysna. If those ANC councillors can’t do their job, kick them out. Ralph will know that when we were councillors we turned Knysna upside down and even dealt with those manipulating officials who took councillors and the community for fools. It is of no use you having councillors just sitting there doing nothing and just waiting for their pay cheque on the 25th of each month. People are fast losing faith in the political parties and processes. We must give people hope and work with them to turn hopes and dreams into reality.
Absolutely. I’ve been straight forward on that with Ralph and have given him the opportunity to do so in his previous interview on this website. Now it’s time to see if he will deliver the info he’s promised which is regarding salaries and ANC Chief Whip, Stephen de Vries’ role in the cover-up at Knysna Tourism. Proof must be in the pudding.
This was worthwhile reading and I cannot leave this without giving my view on it.
It’s very encouraging to hear people, especially the haves and Ratepayers taking on issues against the DA. We are so use to them taking on issues against government and the ANC and therefore the reply of Helen is the more expected, but reading this give me hope for the new year.
I believe people should address injustice where it occurs and not be quiet because it is committed by people with the same complexion as they have or who stay where they stay. Right is right and wrong is wrong. Madiba said he fought against white domination and against black domination. He said people should fight against whoever are doing wrong, so this is a good start. Lets all fight and make a noise against the child that is killed and raped in the location or the fact that pensioners must stand in long queues in the wind and weather at PnP to get their pensions. Let’s fight for all potholes to be filled in the rentire Knysna and for decent services for all.
It’s wrong for the council the gobble up our money and to do whatever they like without any recourse. It’s wrong to pay people millions only to get consultants to do their work. Let the people stand up and fight all injustice, whether its in the location or council or Leisure Island.
Agreed. We have to make people think and act for the whole of Knysna. It tears at me when, for example, a murder in Hornlee isn’t given gravity by my neighbours in Central Knysna because they don’t understand that it’s their town too – people have become too isolated, some because of prejudice and others so as to protect their psyche. We have to stop them being loyal or bias towards their areas or their skin colours and, especially, political parties. There will be sometimes be disagreements on what’s right and wrong but most will agree on a common morality which they must to apply to everyone they deal with, from Smutsville to Pezula. We are stronger together!
And you, as an ANC member, will hopefully encourage your councillors to take a pay cut:)
Ralph, Enrico and others. Is there any possibility that able persons in Knysna and Plett can get together to discuss the common good of our towns ?. With a few provisos that is : leave politics out of it. I am not interested in anyone waving political banners as few of us have any respect for politics. (Wherever one looks there are politicians getting fat out of crooked deals, there is nepotism on every corner and the man in the street is only needed for his money and vote at election time) . The next proviso is to leave self interest and self enrichment outside. Again we are sick of hidden agendas aimed at self advancement or advancement of friends who will always be called on later for pay back time.
Bottom line is : are there any good old honest, caring, intelligent people out there who have our towns and residents’ interest at heart ? And strong people who keep forward and future focus, rather than dwell on the past ?
Patrick and others. Excellent ! We have a contructive debate emerging. Now we all need to decide what it is we want and what it is that is wrong with our town, municipality, tourism association, developers, tender awarding etc etc. At present we have individual little voices shouting what they think. There is no concerted voice saying what the town as a whole feels and demands. To call for a rates boycott is great, but what is it exactly that the town as a whole is unhappy with, and what are we as residents prepared to do about it ?
It it not time for a Greater Garden Route Residents Association (including Knysna, Sedge and Plett) to be formed to speak with one voice representing all concerned residents in the area ? And when someone speaks for GGRA they must have authority and the interest of the residents at heart, not their own political or private greed agenda.
The other issue is financial muscle. Municipality can simply use your money to fight you in court if it comes to that. The GGGRA needs to be properly funded with serious money, that inter alia will fund its infrastructure, admin, staff, blog/communication with members etc. Dont talk to be about R100 pa membership fees as that is not serious money.
Any suggestions ?
Ian Stewart
Save Knysna, Save Plett, Save George etc. organisations that can deal with their own issues but combine with one another under an umbrella for common issues. Finances always a challenge!
I appreciate your thoughts and as said to you previously, believe in an umbrella organisation but first we have to get the local groups to get their act together so that we’re not dysfunctional. The Municipality has been smug in it’s handling of the taxpayer because they know that, for the most part, people give up and what’s popular protest now becomes apathy later. They also know that egos clash and local organisations often become their own destruction. We need committed people who understand that to claim back our rights and our home is bound to be a difficult and long-term process. Only together do we stand a chance at succeeding.
it is about time that we came to realise that all , sorry ALL politicians are like a bunch of bananas, they are yellow, crooked, you can never find a straight one amongst them and they always hang around in bunches.
So far, in my experience, your simile fits perfectly.
The problem is not solely a financial one, but one of dereliction of duty, incompetence, poor work ethic, irregularities, lack of political will, disregard of human rights and deployment of political cadres.
Disciplined withholding of payment on the other hand is motivated by an intention to preserve infrastructure. It is constructive. It is evidence of a sense of civic duty.
If ordinary citizens become indifferent in this regard, we’ll be in even greater trouble.
‘Dereliction of duty’ – spot on. They’ve forgotten the purpose of their offices and no one above them is reminding them. So it’s up to us to do so. Public ‘indifference’ is key. It’s the tide this blog has being trying desperately to turn.
It’s completely legal. See Katz Vs Jhb Municipality.
If you will send me the link, that’d be terrific – thanks.
As much as I dislike Helen Mudge’s odiously prescriptive tone, I have to concede that she’s right about the tack to take. Stop rates payments forthwith.
The only reason these people have their snouts in the trough for, is money. That is their lifeblood… so… cut it off until there is an eruption. An equitable re-shuffle will soon follow.
Open a savings account and put the usual amounts into it, then watch them squirm. It is a legal form of protest in South Africa.
Cut the money flow completely.
I agree that controlling the money gives one power but it’s not that simple. In fact, it’s illegal (which shows how corrupt the system is) so one has to be prepared for a fight. Not to mention that Knysna’s many resident associations need to skip their ego and work together for the first time.
Lets form a committee and fight this issue, lets start brainstorming a better deal for Knysna especially for those wonderfull ,loyal hardworking people, who were EXPLOITED by the “rich” and “they think they famous” people, let simplicity prevail ,without trying to make ANOTHER RAND!!!!!!!!!!!!!!
Several of us are talking so watch this website and my Facebook for when we call for others to help. We have to work together otherwise Knysna will continue to be plundered. Hope the poor and the rich work together towards a better Knysna.
Thanks Ian for such an informative state of the town address. You are right, the municipality is obliged to disclose the salary packages of the municipal manager and the section 57 directors. The fact of the matter is that the municipality is taking us as ratepayers for fools. The Systems Act defines a municipality in short as the Council, the administration and the COMMUNITY. It is high time that the COMMUNITY exercises their right and entitlements as provided by legislation. What is very discomforting is the fact that the opposition parties in council are silent on all these issues raised. Is it because they want to do same when they get into power after the next local government elections in 2016 or is it because they do0 not understand how to interrogate these issues? I suspect that they do0 not understand the issues in the first place. You are right when you say that it is difficult to interpret the budget and I bet you neither the DA councillors or the opposition councillors understand what is going on in the budget. The Executive Mayor according to the Municipal Finance Management Act must present the budget to council, but this stupid ass does not have a clue what she is presenting to council. The community must force the municipality to0 have a meeting with them in order to explain the issues raised in this blog! The community must even consider bringing an application in the high court in order to compel the municipality to give access to information as requested.
The only reason why these criminals are still in office is because the common man cannot afford to spend hundreds of thousands, even millions, on a high court case. And working through government structures has been a frustrating experience – it would seem that the DA exerts pressure on them to obey i.e. no autonomy. As for the ANC, absolutely worthless as opposition in Knysna (and i’ve given my thoughts previously on that). Hopefully you’ll be one of the people working towards a better Knysna in 2014.
Seething resentment continues to grow towards the DA municipal authority of Knysna as ineptitude, lack of service delivery, a crumbling infrastructure, absurd increases in rates and a decaying CBD and industrial area are just some of the burdens ratepayers and residents are forced to bear whilst the DA municipal executive award themselves and their management ever increasing salaries and bonuses, for what is widely considered a dismal performance.
Whilst Knysna is literally dying before the eyes of its residents it comes to light that this municipality is the third most expensive to live in of the twenty five in the Western Cape. The management team of Lauren Waring and Grant Easton have been around far too long for comfort, few disagree that they are a serious liability. Accusations of corruption abound. Businesses and residents are abandoning Knysna at an alarming rate. If this is not arrested soon our town will be reduced to a crumbling shell.
A shell of a different sort i.e. a town of chain stores, developers, servants and the unemployed.
Dear Ian,
Unfortunately, although you are probably quite accurate in your figure-work, your letter is worded so poorly that it becomes boring to read…even if one is keen to read what you have to say. If you are truly disillusioned with the set-up in Knysna, then you and the rate-payers need to seriously challenge the salary and staffing structure of your Municipality. This can be done quite easily, if the majority of the Ratepayers Association decide to withhold their Rates until such time as they are satisfied with the Municipal Budget. It will require the standing together of all Ratepayers. We have a similar problem in Plettenberg Bay.
Also, I would you urge you to sign the following Petition to Impeach Zuma, and to spread the word – we can only get rid of corrupt politicians by standing and ACTING together … We, the people, have the Power. Here is the link …
http://www.change.org/en-GB/petitions/parliament-of-south-africa-and-political-party-leaders-impeach-president-jacob-zuma-for-nkandla
Also I’d advise you to join the People’s Parliament of South Africa page on Facebook … there is alot of action brewing that we all need to support, talk about, and join forces.
Cheers! Helen Mudge
Appreciating those who make an effort is more important than criticising style of writing. Yes, rates is always an option but far tougher than it seems. I, and many others, signed the Zuma petition. Plett, Knysna, George and Oudtshoorn share many commonalities so need to work together but before we get to that stage we have to prove that our local residents organisations can do so first. Please send me the link for the People’s Parliament of South Africa as i never found it. Thanks.
Thank you for this, it explains simply how crooked the system and politicians are. Knysna has become depressing, we’d sell and move but cant- property prices are too low. The smell of sewage floats in the air, the roads are messed up, and a developer has been employed to design the future of the town. Greedy rampant development and too much concrete is the cause, so now the golden goose is sick, if not dead already.
For me, a fundamental condition for living in a town is to have good neighbours who share beliefs worth standing up for. Knysna standing together (or not) in 2014 will decide whether or not this is home.