Community Response to Council’s 2015/16 Budget Draft

The following response was submitted to Monash Council today :

2015-16 Budget Review Highlights

MRI’s review conclusion of the 2015/16 Budget raises concerns of transparency and accountability.

When Cr Lake said (in the last Council meeting) the sale of aged facilities are put into a Debt Management Reserve, which is now being used to wipe put Council’s $15 mil debt, he is technically correct, but he forgot to say that the future cost savings resulting from the sale has put Monash Council into a healthy financial position for many years to come.

This is evident through two financial indicators:

  • Working capital ratios are noted to be increasing above the target threshold of 150%, especially from 2016/17 onwards when rates revenue have been affected by annual rate caps. The above 150% margins represent over-gearing of slack.  What is this “slack” is for, is not disclosed in the draft budget.

 2015-16 Working Capital Indicators

  • Unrestricted cash build-ups for the next 4 years, growing by ~20% even when rates are capped.  Over stated unrestricted cash levels are indicating funding for future large capital works, which need to be declared in disclosure of commitments and for audit purposes (LGPRF Version 4 ), hence availing clear and discrete public disclosure. There is no such information, or if it exists, it is definitely not explicitly disclosed.

 2015-16 Unrestricted Cash Indicators.png

We also noted that Council’s asset renewal ratio is under 100%, which means Monash is not spending to improve its existing infrastructure which is deteriorating faster than they are being replaced, but is putting money away under over geared working capital and unrestricted cash reserves.

Experienced budget planners know that these financial performance indicators often hide budget manipulation decisions or games. Hence it is not illogical that these indicators can potentially reveal:

  1. There is another Defined Superannuation Liability shortfall looming with the next 4 years. The question is why is the risk management of this staff superannuation portfolio has to become so discreet and implicit – Cr Lake, an MAV representative, needs to explain what is MAV doing to ensure and disclose improvements to making risk management of LG Defined Superannuation Portfolio more prudent and predictable and guarantee such as significant shortfalls are prevented and mitigated in the future.
  2. Risk provision for accumulating and growing capital costs of asset renewal, because Council is still struggling to renew its infrastructure assets which are deteriorating faster than they are being replaced. The question is why is Cr Lake had initiated and is continuing to push for investing in a “nice to have” but not mandatory new Glen Waverley community/library Hub which will cost ratepayers lots more in future acquisition and ongoing maintenance, when existing infrastructure are falling apart and not being replaced fast enough? Is Monash Council into building capital monuments to fulfil Councillors’ individual wish-lists? While there is no formal decision made to build this new infrastructure amenity, its project activities, like the one for selling the aged care facilities, would be pre orchestrated towards steering to future approval eventually.

During the Melbourne 2030 era, Monash Council was confirmed to be among the five to ten percent of cities with the worst performance in allocating open space for its community. Since then, Council has done nothing to increase public open space problem in the city when population has been growing and is expected to increase further with the implementation of Monash Housing Direction strategy.  In the last seven years, land purchased by Council was for drainage purposes. Why have Councillors NOT place a high priority on increasing green public open space when their planning decisions’ direction is to increase Monash population and move towards more higher density and compact living conditions?

Councillors have an obligation to its community to:

  1. Ensure, in the final budget report, open disclosures of what the over-geared working capital and unrestricted cash ratios would be possibly spend on;
    Transparency & Accountability
  2. Ensure Cr Lake, as an MAV representative and Director, as well as a Trustee Director of Vision Super, disclose the  risk exposure of Council’s Defined Superannuation Liability over next 4 years, and what risk management improvements have MAV undertaken since the last shortfall of over $12 million.
    Portfolio Risk Management
  1. Explain why is investment in new and larger capital, such as the Glen Waverley Community/Library Hub is considered a higher decision priority than renewing current assets that are deteriorating faster than they are being replaced?
    Priority Mgt
  1. Explain why they have not advocate to increase Monash’s green and public open space when they are strongly supporting for more compact and higher density living conditions in Monash?

Open Space Planning

Transparency, Accountability & PublicityWe anticipate seeing a Councillors driven address of these concerns of the 2015/16 Budget Draft. Their decision to accept the budget will also reflect their resolve to improving budget transparency and accountability, and reducing community engagement tokenism.

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