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Extract from the Age, February 21, 2013: Richard Willingham reported:
VICTORIA’S nearly 80 local councils do not properly consider the impact that rates increases have on residents, with ratepayers not afforded transparency on how and why councils set annual rates, the Auditor-General has found.
An Auditor-General’s report tabled in Parliament on Wednesday said the current rating framework lacked ”clarity, detail and direction”.
Victoria has 79 councils that all rely on the revenue generated by property-based rates and charges to provide services to local communities.
The report found that there was a ”limited assurance” that all councils ”systematically and rigorously” considered the information needed to understand the impact of rates proposals on their communities
”Councils primarily rely on their annual budget development process to engage ratepayers about rating decisions,” the Auditor-General said.
”While they do respond to ratepayer submissions as part of this process, they do not always adequately explain how they have considered their issues in the rate-setting process.”
In 2011-12 councils generated operating revenue of $8.18 billion, with rates and charges making up $4.09 billion.
The Auditor-General found that between 2001-02 and 2009-10, mean rates per property assessment in Victoria increased by an average of 6.3 per cent a year, outstripping Consumer Price Index rises.
The Auditor-General found that the state Department of Planning and Community Development did not proactively support or guide councils and could not provide assurances that laws for councils on rates were being applied.
It recommended that reporting of data should be improved and standardised so that it is consistent across all councils and easily interpreted by residents.
”Council engagement and communication with ratepayers on rating decisions and rate matters varied significantly in depth and quality. Councils do not provide sufficient or consistent information to ratepayers about their rating decisions,” it said.
The report also identified the major drivers of rate increases in 2012-13, which included the carbon tax, maintaining services and cost shifting by other levels of government.
Local Government Minister Jeanette Powell said the report showed the importance of the decision to develop a mandatory performance reporting framework for local councils.
“The policy development will help councils to develop a more strategic approach to the use of rates and provide the public with a better understanding of how their local council is performing,” Ms Powell said.
She said Local Government Victoria will release an updated rating strategy guide after the ministerial guidelines for differential rates – some councils charge pokies venues double rates to fund problem gambling projects – are finalised.
Shadow local government minister Richard Wynne said rates are a substantial impost on every household and that it was ”incumbent on all local governments to be as transparent as possible in informing ratepayers on how rates are collected and what they are used for”.
The Age (23 Oct 2012) reported that:
HELEN Whiteside considers herself a normal sort of person. She’s political, no doubt – a paid-up Liberal Party member. But her time as Glen Eira mayor left her so disillusioned she wonders why an average community member would bother running for council.
With council elections winding up this week, Mrs Whiteside is calling on residents to scrutinise candidates carefully. As for the troubled Glen Eira councillors – some of whom were sacked in 2005 and are standing for re-election – they all deserve to be thrown out, she says.
Glen Eira – which covers suburbs such as Caulfield, Bentleigh and Elsternwick – consistently outperforms other councils on community satisfaction.
But in the past four years the council has faced the Ombudsman’s scrutiny over 10 separate issues, one Ombudsman’s report revealing Councillor Frank Penhalluriack’s alleged bullying behaviour and failure to declare conflicts of interest, and a critical assessment from the local government watchdog, the third since 1998.
Mrs Whiteside, a popular mayor, resigned in 2010. The council suppressed her letter of resignation. She told The Age she resigned because she felt some councillors were not declaring conflicts of interest and were set against chief executive Andrew Newton, wasting at least $30,000 on extra legal advice during the renegotiation of his contract.
Now that every sitting councillor except one is standing for re-election, the former mayor says residents should think carefully. ”Integrity is fundamental to being a councillor,” she says. ”Transparency, accountability and being objective. I believe councillors should make decisions for the long-term best interests of the entire community.
And her former colleagues? ”I don’t think they should be re-elected,” she says.
Mrs Whiteside said she was particularly disturbed about the 2010 decision to relinquish public open space to the Chabad House synagogue extension at 441-496 Inkerman Street, St Kilda East. She alleged Cr Michael Lipshutz had a conflict of interest because of an association with the synagogue’s benefactor, Jewish community leader Joseph Gutnick.
Mr Lipshutz said Mrs Whiteside’s revival of this matter was ”anti-Semitism of the worst kind. She is saying that because I am Jewish I am not fair-minded … I have no association with (Mr Gutnick) whatsoever,” he said. (Greens Cr Neil Pilling also voted to hand over the park.)
Mr Lipshutz said Mrs Whiteside was a ”failed councillor and a hopeless mayor who divided the council”.
Since the last election in 2008, councillors have had several brushes with the state’s integrity agencies and the court system. This year chief executive Mr Newton filed a bullying claim against Cr Penhalluriack. The hardware store owner refused anti-bullying training and is fighting councillor misconduct allegations at the Victorian Civil and Administrative Tribunal.
In a 2010 investigation, Chief Municipal Inspector David Wolf found insufficient evidence to prosecute any councillor, but uncovered councillor behaviour ”at odds” with the council’s objectives and ”underlying issues with regard to transparency and accountability”.
When drafting the chief executive’s contract in 2010, councillors inserted a clause requesting he notify them of any inquiries from the state’s integrity agencies. Mr Wolf found the illegal clause existed in an early draft, but no one owned up to putting it there. ”Despite all the talks and presentations the councillors get on governance, it is still not getting through,” a council source told The Age.
The Glen Eira city council elections are this Saturday.
We encourage ratepayers to log their budget review experiences and leave an audit trail of transparency and accountability issues. We will publish this audit trail in this website – the information will be used as evidence to assist RPV’s discussions with the Minister of Local Government and also to help the Auditor General Office access case studies for their on-going audit reviews of Local Government functions. The first audit trail is the Monash case.
Rate hikes are happening in many Councils across the country. We review a few budgets in several cities and are finding a common pattern – there is no transparent sound justification underpinning annual rate hikes. Some Councils are also misleading ratepayers in budget review – Councillors already agreed on rate increases and consequent budgets when Council allow the process of public review to occur. The process is not democratic nor is transparent and is most misleading.
The Municipal Association of Victoria (MAV), an association of all Victorian councils, thinks that council rates are property taxes and yet many Councils charge rates based on the costs of services. MAV also states that “An increase in property values does not cause a rate rise. Council budgets are pre-determined to meet expenditure requirements, and include any potential rate rise. Property valuations are revenue neutral – they are used to distribute how much each ratepayer will pay, according to the value of their property compared to other properties within the municipality.“ Ratepayers need to see market value and operating cost drivers of their annual rate increases in their rate statements, not hook winked by obscure excuses in news and Council website media.
A Press Release has been issued to highlight the major concerns discovered in the review of several councils’ financial management and rating practices. A recent April 2012 audit report on council’s performance reporting practices is currently available on the VAGO webpage and the issues reported also impact rate pricing and confirm some of our investigation findings. Also see pages inquiry projects and election matters.
Read this 31 Jan 2012 Herald Sun article – Example of governance questions that ratepayers can ask of their Council:
- Has the implementation and on-going financial management of the decision been evaluated during its making?
- Did the agreeing Councils consider other more effective strategies that can better benefit the Aboriginal community?
- Has the local ratepayers been consulted as they are funding the implementation and on-going expenses of their Councils’ decisions?
- Has the Aboriginal community been consulted to confirm that this decision is what they want as best choice?
Council decision making has to be accountable – is it? Who owns decision accountability? What protection or legal rights ratepayers have when no one takes accountability for poor decisions?
The evidence …..
The aboriginal funeral idea is out of line with directions of the Aboriginal and Torres Strait Islander’s national Reconciliation Action Plan (RAP) framework. This RAP framework prefers organisations to pursue reconciliation through clear actions and commitments focussed on respect, relationships and opportunities (The Australian, 6 Feb 2012). Dr Calma (Reconciliation Australia co-chair) states that “RAPS are helping to build a nation that understands its Aboriginal and Torres Strait Islander cultural roots and that’s something that benefits all Australians”.
Unfortunately, the aboriginal funeral expense reimbursement decision agreed by several Councils recently showed evidence of poor, irresponsible and discriminating Council decision making because:
- As an advocate for multiculturalism, Councils should know better that Australian indigenous people are made up of 2 distinct groups – the Aborigines and Torres Straits islanders. By excluding Torres Straits indigenous people in the Councils’ consensus decision, they have violated racial equality in their decision making and created disharmony in RAP execution.
- The consensus decision creates public conflicts that divide the indigenous people and other Australians in the ratepayers community
- There is no disclosure of financial funding and sound management to ensure no impact on future rate rises, which may also result in controversial public debates that adds to the unnecessary divide of the indigenous people and the wide Australian community.
Council decision makers are community leaders and not understanding the governance requirements and public harmony of their consensus decision is no excuse. They can be asked to resign or not stand for the next election, or even to be sacked as the growing preception is that they not capable and befitting to represent their ratepayer communities.