Results of Councils’ Rates Variation Applications

The ESC just released their decisions of the rates variation applications submitted by a number of councils. They are:

The full report of the rational decisions and underpinning reasons are found in Overview-of-Local-Government-higher-cap-decis…pdf (159kb)  and there is the Q&A resource    Approving higher caps – Questions and Answers.

We anticipate several councils and highly possibility peak bodies will be spilling “blood” in the street, with ESC the main target.  If and when this behaviour reaction realises, then a lot will be revealed about and confirm the good governance culture of our councils and their peak bodies.

The decision report is rational, of high professional quality and based on very clear decision criteria that were well communicated upfront before the rates variation process commenced.  Applicants also had many opportunities to consult with the ESC, to ensure their applications meet the criteria.

Councils’ Growing Insurgency Against Rate Capping

It is AMAZING that the Casey Council submits an unusual business case for raising rates of 0.97% above the capped level of 2.5%, to cover a shortfall of $1.605mio in a $9mio new investment.

The Herald Sub’s news story (29 May 2016) below confirms that the council is poised to spit the dummy if and when the ESC rejects their rates variation application.

It is no rocket science to clearly see through Casey council’s behaviour, which is part of an ongoing collective groupthink campaign by many councils and their peak bodies to discredit the rates capping policy and to attempt social engineering a strong a public opinion that the rates capping policy does not work.  This campaigning  of course works beautifully for the opposition party’s politicising, conveniently  using councils’ foul cries to claim the rates capping regime is a shambles.  It is all but a poor attempt to enact a Monty Python show.

Street warfare is not only between the anti-Islam and anti-racism protesters. VLGA leaked letter is also revealing that councils and their peak bodies are using street warfare tactics in their social engineering and media propaganda to publicly fight their opponents, especially targeting at ESC, accusing them they lack  understanding of how local government works.  The key difference is the anti Islam and racialism folks use physical violence and councils and the peak bodies use psychological warfare. Both cases are unacceptable, especially more so for council and peak body insurgents.

The naked truth is that how local government currently works now is NOT acceptable and councils and their peak bodies are working hard to defend their legacy empires when eminent and positive changes are rolling out to clean up the system to be more efficacious and community centered. They do NOT like the change, full stop. Anyone involved in implementing the change is an enemy.

The financial justification of Casey’s rates variation application:

What they apply for? They want to increase rates to 3.47%, not 2.5%, to raise $1.605mio to build $9 mio worth of new infrastructure amenities. 

While they ask for $1.605mio extra, they are also making  profit equivalents for the next few years . Presently, they are making profits / surpluses which are significantly above their peers and all councils average.

The dubious budget games:  While enjoying excessively high liquidity, Casey is also maintaining excessively:

  • Over geared working capital ratios, which again are significantly above peers and all councils average (150 – 200% is good practice targets in LG, industry rule of thumb is 150%

  • Over maintaining unrestricted cash reserves, which again are significantly above peers and all councils average. Good practice is under 100%.

Its financial performance indicators also revealed the Council has ample capacity to:

  1. Repay the principal and interest amounts of  its loan exposure, which is anticipated to grows by about 10%, from  ~36% to under 45% of its rate revenue, in the next few years;
  2. Improving  its assets renewal position in the right direction, ie aiming to achieve 90.96% next year, however it plans to reduce capacity to 84.32% by 2019/20.

In 2015, Casey happily spend thousands of dollars on paying ratepayer attendees $120 each to attend a community engagement forum for gauging support for rates increase higher than 2.5% (Berwick Leader, 2015). Obviously, bribe is so blatantly open and public in council practice as well.

It is a no brainer why ESC or any financially literate person would not question Casey’s application for increasing rates above 2.5%, which only asks for a mere $1.605mio. In previous years, it has grabbed more than is needed from its ratepayers excessive rates to build up its over geared liquidity position and any forward explicit and implicit spending for a good number of future years.

Furthermore, the large unrestricted cash and over-geared prudential reserves (eg working capital) would already inflated total revenue, which added significant “fats” in general rates calculation to grab even more from its rate payers. As Casey’s budget methodology is incremental, this deliberate “fat” will be permanently sealed and infused into future budget plans – a new concept of inter-generation budget obesity trend in LG.

One wonders whether the real intention of the rates variation application is to smear the rates capping policy and discredit any party that is committed to make it work.

We need to remind ourselves that LG is not in Wall Street, where the culture is “greed is good”.  It is a subordinate entity to the state portfolio of LG under the management of the Minister of LG, as confirmed in the Victorian Constitution, not MAV and/or VLGA.

Greed has no place in property taxation and municipal service charging. Time to downsize councils and get them operating community centered and like the real world, where lean and best value should be the new black in the land of local government.

Bagging Rates Capping

Whether it is an oversight or politically incited process, the current legislative inquiry into the rates capping policy has allowed more opportunities for councils and their peak bodies to  engage in political leverage to:

  • bag the policy’s implementation;
  • justify publicly service cutting in councils and
  • winch about laborious cost-benefit justification and compliance effort in apply for rates variation.

Ratepayers Vic, via one of our members, presented insights of why do we have rates capping. The key contributing reason comes from councils’ common budgeting approach, which discourages collaborative community engagement and participation in budget planning. It is no wonder why ratepayers have no confidence that their councils are making the right financial decisions every year.  This is how the budget planning process typically work in your council:

This process is the primary reason we have rates capping today.  Moving to a participatory and zero based budgeting process will improve community confidence in council’s financial planning, while removing the need for rates capping.

To access:

  • RV’s presentation to the legislative inquiry into rates capping, please click here.
  • The official transcript of the presentations and Q&A dialogue is presented, please click here.

 

Rates capping and service threats

ANDREW JEFFERSON reporting in the Herald Sun (15 Feb 2016):

” COUNCILS are threatening to stop funding vital services provided by the State Emergency Service, childcare centres and school-crossing supervisors if their rates are capped.

But at the same time, they continue to splurge millions of dollars on curious projects.

Most of Melbourne’s 31 councils, and many regional councils, say State Government caps to limit rate hikes to inflation are unsustainable, and they are contemplating scrapping funding for what they consider “state” services.

But ratepayers, calling the threats unethical, are demanding councils control spending.

Rate rises will be capped at 2.5 per cent from July 1.

MELBOURNE CITY COUNCIL AMONG 21 SEEKING RATE CAP EXEMPTION

The Herald Sun has found:

KINGSTON, which is considering ditching SES funding, spent $340,000 on a Kingston Green Wedge Plan in 2014;

MORELAND is spending $73 million a year in wages for its 1000-strong workforce and last year splurged $2500 on a documentary on its $500,000 campaign with Yarra Council to halt the East West Link;

CENTRAL Goldfields, which is scrapping funding for SES units in Dunolly and Maryborough to save $26,000, spent $70,000 in 2012 to cover legal costs of a councillor found guilty of a conflict of interest;

HUME, which spent $50,000 on art made of blackboards in 2014, is reviewing services; and

NORTHERN Grampians, which sent ex-mayor Wayne Rice to China three years ago as part of a government trade mission, closed a childcare centre in Stawell in December.

The SES said Wellington, Central Goldfields, Mitchell, Campaspe, Buloke, Loddon, Darebin and Kingston had all flagged a review of support.

Other “state” services that councils are considering for cuts are home and community care, aged care, disability serv­ices, libraries, and maternal and child health services.

Moreland councillor Oscar Yildiz said the council would struggle to sustain all of its current 100-plus services. But he conceded council probably wasn’t as efficient as possible.

“I don’t want to see people lose their jobs, but I reckon I could save each council in Victoria about $20-30 million in efficiency savings,” he said.

Hume Mayor Helen Patsikatheodorou said council was reviewing all of its services.

“Over the years, we have been contributing more and more and receiving less and less from the state,” she said.

Boroondara, whose chief executive Phillip Storer earns up to $390,000, estimates the cost of school-crossing supervisors, maternal and child services, libraries and home and community care services in 2014/15 was $11.3 million.

Greater Dandenong Council chief executive John Bennie has said the “impact of successive years of rate capping will require us to reduce service levels in future years”.

But Ratepayers Victoria’s Chan Cheah said councils were playing a “blame game”.

“Using the safety of schoolchildren as budget negotiation tactics is not exactly ethical, and reveals a lot more about … governance quality in local government,” Ms Cheah said.

Northern Grampians Mayor Murray Emerson said councils got 3c in the tax dollar compared to states’ 16c and the Commonwealth’s 81c.

“For local government to be sustainable, this needs to change immediately. Each service this council provides has been subject to a stringent review, and services which are not the mandatory responsibility of council will (be) subject to a subsidy decrease,” he said.

Local Government Minister Natalie Hutchins said councils had the capacity to tighten their belts and she would be surprised if any stopped funding popular local services.

CUTS, THREATS AND SPLURGES

KINGSTON

The threat: Considering ditching funding, including for SES

What they’ve spent: $340,000 on a Kingston Green Wedge Plan in 2014.

MORELAND

Threat:Reviewing all services

Spent:$73 million a year in staff wages in 2015 and splurged $2500 on a documentary glorifying its $500,000 campaign with Yarra Council to halt the East West Link.

HUME

Threat:Reviewing all services

Spent:$50,000 in 2014 on a piece of art made from old blackboards.


NORTHERN GRAMPIANS

The cut:Closed a child care centre in Stawell in December

Spent: Sent former mayor Wayne Rice to China three years ago as part of a government trade mission.

BOROONDARA

Threat:Estimates the cost of providing school crossing supervisors, maternal and child services, libraries, and home and community care services on behalf of the state in 2014/15 was $11.3 million.

Spent:Chief executive officer Phillip Storer is one of the highest earning in the state with salary up to $390,000 a year.

DAREBIN

Threat:SES says the council is considering ditching funding, council says it’s analysing the impact of rate capping.


Spent:
$100,000 taxpayer-funded grant aimed at countering violent extremism among Muslims to help deal with traffic issues during the religious festival of Ramadan.


GREATER DANDENONG

Threat:Warns successive years of rate capping will require it to reduce service levels in future.

Spent:$486,332 on parking ticket machines across Dandenong in 2014, which were later vandalised.

BALLARAT

Threat:Says rate capping may influence decision making in the future.

Spent: Staff gorged their way through almost $30,000 worth of cakes and slices between 2012 and 2014.

YARRA RANGES

Threat:Says long term rate capping could force it to prioritise services.

Spent:Ratepayers forked out $8000 last year for councillor Fiona McAllister’s childcare fees, including bills for a private carer.

CENTRAL GOLDFIELDS:

The cut:Scrapped funding for two SES units in Dunolly and Maryborough from July to save $26,000

Spent: $70,000 in 2012 to cover the legal costs of a councillor found guilty of conflict of interest.

SES staff fear for the future

STATE Emergency Services staff say they fear for the future of the vital service if councils ditch funding.

It comes as a fight is brewing over the future of crossing supervisors.

Wellington, Central Goldfields, Mitchell, Campaspe, Buloke, Loddon, Darebin and Kingston have all flagged a review of SES support.

SES Maryborough controller Jesse Wright said he was “pretty concerned” about the branch’s future.

“Our volunteers train for 48 weeks of the year but are we now going to ask them to spend that time shaking donation tins, as well?” he asked.

Central Goldfields, which has ditched SES funding, is also in “serious discussions” with local schools and VicRoads about whether it could continue to fund school crossing supervisors.

“I’m extremely sympathetic to the SES but we don’t subsidise the CFA or Ambulance Victoria, so why should we pay for the SES?” Mayor Geoff Lovett said.

Several rural councils are considering following Northern Grampians Shire, which pulled the plug on school crossing supervisors to save $45,000 a year. “

Bananas Council – the new “Black” banana republic concept in LG Referendum

Journalist Andrew Jefferson’s story is a hilarious ripper (Herald Sun, 15 Feb 2016):

News line: Person dressed as banana disrupts Mitchell Shire Council meeting

A council meeting had to be adjourned after a person in a banana suit disrupted it and started handing out bananas.

 

 “A person dressed up as a banana forced a council meeting to be abandoned.

Last night’s (Monday) Mitchell Shire Council meeting was interrupted by a large banana entering the council chamber towards the end of the meeting.

The banana handed out bananas to members of the gallery and councillors.

Mayor Sue Marstaeller was not amused and after a struggle closed the meeting.

An onlooker, who wished to remain anonymous, said it was the strangest thing he had ever seen at a council meeting.

“It was quite comical when a person in a banana suit started handing out bananas but the mayor failed to see the funny side,” he said.

The banana entered the chamber just as the council’s councillor expenses policy was about to be discussed.

Cr Marstaeller was involved in controversy in January when she took the mayoral car to Coffs Harbour, which features the big banana as an icon, over Christmas.

Cr Marstaeller said she was not impressed by the sudden nterruption.

“It was pretty disrespectful,” she said.

“I asked this person to stop but they continued to hand out bananas to people so I was left with no choice but to adjourn the meeting.”

Last night’s meeting has been rescheduled until next Monday.

The banana escaped out of council chambers into a waiting car.”

New Year Message from RV President

Hello, happy new year and trust everyone had a great festive holiday.

It was a great finish to 2015 – the year of great milestones, when Ratepayers Victoria (RV) was able to accomplish several great achievements for Victorian ratepayers and residents.

What we did last year

We successfully engaged with the Local Government Minister (Natalie Hutchins) and Shadow Minister (David Davis) , Local Government Victoria (LGV) and Essential Services Commission (ESC) to advocate for rates capping, which is now in the LG Act, effective for next financial year’s council budgeting. RV was invited to be on the Fair Go Rates committee, a new precedent where ratepayer representation is made official in a state’s LG program committee.

We also hosted a successful seminar in November 2015, which was over booked, and well commended by attendees, including the Minister and guest speakers. For the very first time, we had able to have a LG Minister engaged in conversion with a state-wide group of ratepayers about local issues and the opportunities for reform.  The Minister confirmed what we already have experienced, that current LG system is broken,  hence enabling many councils and MAV to breach compliance and good governance with little penalty consequences. That would change with the Minister’s new program for improving the LG Act and other associated laws.  RV also worked with a few groups, to submit a response to the LG Act review, which is now published as item 191 in http://www.yourcouncilyourcommunity.vic.gov.au/submission. Many ratepayer attendees has asked the Minister questions. These questions have been passed to the Minister’s staff in December and indicative responsive time is between late January and before February. For those who provided an address, the answers would be posted. Regardless, when RV receive the Q&A, we will publish them online on our website and send our network members email notifications.

LGV has released the https://knowyourcouncil.vic.gov.au/ website – a great resource for ratepayers and investors to know about the profiles and performance of all 79 Victorian councils. This website uses performance indicators linked to an important performance management standard, called the Local Government Performance Reporting (LGPRF).  LGV plans to further improve this standard, to increase more transparency and accountability through reporting councils’ performance in different and high impact areas. RV is once again invited to sit in the LGPRF committee, to help improve the performance indicators and reporting. For more information about the LGPRF program – click here.

Plans for 2016

Several projects in the planning pipeline are now ear-marked for project development. The first two projects commencing in Q1, 2016 are:

Project 1 – Fair Go Rates Monitoring & Reporting

Monitoring and reporting the quality of community engagement councils delivered as part of their application process for requesting capped rate variations. We will be releasing a survey and social media conversations about how local communities evaluate their council’s community engagement in compliance to the ESC guidelines, especially the community engagement reference guide. You and other locals play an important role in reporting how well your council has engaged with your community in explaining why they need to increase next years’ rates above the capped levels, what alternative trade-offs they have considered and the quality of public information they openly shared with you.  RV will email you once we set up this new Fair Go Rate Monitoring and Reporting (FGRMR) system.  You can preview a prototype in progress and give us feedback via ratepayersvictoria@outlook.com  – click here to access the test system.

Project 2:  RV Ambassadors

RV is now operating as a 21st century networked organisation of connected ratepayers and residents advocating for better good governance and service performance in all Victorian councils. To do that advocacy role effectively and sustainably, we aim to increase local presence and impact in every municipal city. We are now asking people in our networks if they would like to become RV ambassadors in their own cities. You have to be a group, either already incorporated or we can setup your group as a chapter in RV incorporated.  Knox Ratepayers Association (KRA) and Monash Ratepayers Incorporated (MRI) has formally merged to form a regional Eastern Ratepayers  (ER) Incorporated entity and continue to operate KRA and MRI operations independently as two separate chapters.  The immediate benefits  are that they reduce governance and administration, can share knowledge,  resources and specialisations and leverage a wider, stronger and higher impact advocacy base to address common and local issues. ER is also working with Casey Ratepayers and Residents Association as an affiliate. Let us know if you would like to be a local RV ambassador in your area – email us at ratepayersvictoria@outlook.com .

During the year, we will update you with these projects’ progress and several other new ones currently in the planning pipeline. Have a successful 2016 year with your advocacy work and making LG a better collaborative system for all community, council and state government agency stakeholders.

Jack Davis

President Ratepayers Victoria.

RV’s Submission to the Local Government Act Review call

Reforms are coming to the Local Government (LG) sector in Victoria. A major activity towards LG reforms is reviewing the present LG Act and restructuring it for re engineering better and community centered councils for us.

This morning, RV just submitted a response to this review. We thank members of our network who also submitted their responses, making sure changes to the Act will be more ratepayer and community centric.

If you want an official reference that confirms the current shortfalls in the LG system, refer to the http://www.yourcouncilyourcommunity.vic.gov.au/discussion-paper for details.

Synopsis:

In the submission, we made the analogy that the LG Act is like an operations handbook for councils. It is purposed to support the State Government (LG Minister) oversee and harmonise the 79 councils’ operations, to ensure peace, order and good government for all Victorians.

A legislated council handbook does not mean the  councils are 79 mini autonomous  State Ministry entities having all and delegated powers to provide municipal services to Victorians. They were and are never the third tier of legitimate government in Australia and should never seek future referendums to become one. Because they are just body corporate entities of the Victorian LG Ministry.

RV used a system reengineering approach to review the LG Act and recommend ideas to make it a better organised, 21st century relevant, and best practice oriented operating handbook. We understand that this handbook is for all councils to refer to and comply with, in order to perform their state-delegated governance and enterprise roles and functions, via municipal service provisioning. Because it is legislated, the Victorian Parliament will approve its contents and purposed uses and any of its future amendments will continue to be sanctioned through state law making procedures.

The submission discussed some ratepayers’ observations, case study exemplary and analytical commentaries about current gaps and reform ideas, which is useful for supporting the LG Act’s restructuring and contents development.