Archive for category Budget
Over 90 people attended the draft budget community presentation meeting on the 16 June 2015.
Not surprising the Mayor did not attend, and as usual Cr Lake loves control and chaired the meeting.
In addition to the summary of our submission Presenters’ issues concern:
- Unaffordable rate rise above CPI for pensioners and low income residents/ratepayers
- Community groups advocating for updates to council owned infrastructure amenities that they used. The largest group was the Waverley Gymnastics, who was appealing to Council to allocate $2 mio to update facilities
- The high differential rate imposed on Highvale retirement village residents.
Surprisingly, Cr Lake allows a non-resident/ratepayer to present her case for seeking the $2 million for the Waverley Gymnastics. It appears Council is discretionary or discriminatory and sending mix messages about its compliance to local laws regarding the exclusion of non residents / ratepayers to speak/present during official meetings. That says a lot about the integrity and quality level of good governance exercise in Monash Council.
Wow, we even had some interactive Q&A – amazing? We asked Council what is its priority setting criteria for deciding which community club and assets renewal areas to fund in next year’s budget. The “on the fly” answer from Cr Lake is that the criteria is based on some rankings of one or more strategic direction/s in the Council plan – good bluff/fluff.
Only two Councillors interacted in the Q&A, Cr Lake and Davies, the others said nothing – maybe financial literacy is a barrier?
Anyway, we follow up with a email correspondence to the Councilors forming the budget review committee, or something like that, and see what transpire from it. keep our expectations low so that any response can be a elated experience?
We just completed reviewing the budget. Nothing new has changed. Transparency and accountability issues are still Monash Council’s budget planning and decision making integrity weaknesses.
Not surprising, Council is putting large amounts of unrestricted cash away (like $32 million in next year’s budget and $39 million in 2018/19) for long term capital projects that have not been approved yet. It is common community knowledge that the Glen Waverley Community Hub development (which many people believe is the very reason the 3 aged care facilities were sold) is the key driver of this large unrestricted cash reserve, which grows every year for the next 4 years. The community can expect another premeditated and biased decision making process to be played out as part of tokenistic community engagement to get this project approved and officiated its funding, now hiding through Unrestricted Cash & Working Capital Reserves.
Another thing we have taken note is the rush to spend all unused budgets, especially Councillors’ total discretionary funds. As the 2014/15 year is closing soon, it is important that Council spends any surplus cash as much as possible, to justify asking for more rates rise. Hence it is no wonder why the Mayor personally authorised the $37+K free lunch for Greek Easter and now a Councillor suggesting to give $10K foreign aid/charity. In the May Council Meeting Agenda item 7.1 (page 1), Council officers are recommending close to $10,000 to be given away, which is a high amount compared to past practices. It certainly appears there is money left over in the budget, especially Councillors’ discretionary budget total and they know they must spend it all before 2014/16 closes, which explains their generous giving of money away without best value justification, hence compliance to LG Act.
In the last month’s Council meeting Cr Geoff Lake, speaking in support of the budget noted that paying out the Council debt early was possible because of the sale of the residential aged care facilities. Ops the cat just slipped out of the bag. This contradicts with the official reason Council said, which was the operating the aged care facilities were financially unsustainable.
Another thing, we also discover, unrestricted cash constitutes between 19.62% to 21.7% of total revenue annually over the next 4 years, which means Monash Council has not just the capacity to cap rates, but to actually reduce rates, even during the last 2 years. So have ratepayers being lied to when the Mayor claims the 2015/16 budget draft provides a fairer rating system and gives ratepayers the lowest rates in Victoria? And if that is not enough to influence public opinion, try Cr Lake wanting to sweeten pensioners with a $50 rates discount, which works out to 96 cents a week or 14 cents a day, depending how dumb one assumes pensioners to be. Once again it is about our patronizing and groupthink Councillors doing for its community, not with its community.
Cr Dimopolous , wearing his ALP hat, says vote for him and one of the things he will do is to “apply a new cap to Council rates – meaning councils will be accountable for how they spend your money”. Raising rates when Monash Council is financially too well off is definitely not responsibly cool.
However, our disengaging ALP Mayor and Councillors are likely to think otherwise of this ALP policy. The community will be watching where Cr Dimopolous’ creditability lies in this coming Council’s Tue meeting. Will he support his peers and vote to raise rates by 6%, and compromise his state election promise, or will he refrain from voting again using the excuse of “personal conflict”? Or will he really admit the Council is not responsible to raise rates by 6% and would vote against it?
The community will be watching what he will do on Tues meeting.
The morale Q of the story is do our Councillors really make decisions for the interest of the community, or really for themselves?
The truth is out there on Tuesday’s Council Meeting…….
The Mayor’s budget message says “By working smarter across all areas of Council activity, we have achieved $2.8 million of annual savings which we will now use to reinvest in Monash’s physical infrastructure. I am very pleased that this extra spending has been achieved through driving internal efficiencies rather by simply hiking rates …… as a result of these comprehensive service review, I am confident that there is no other council in Victoria which is more efficiently run than this one”.
We conduct an analysis of Council’s budgets over the last 3 years:
Since 2012, Councillors’ collective decision influence on budget planning reveals that expenditure in community development services is incrementally reducing over the last 3 years, to allow for increases to:
- More infrastructure capital and city development spending;
- More overheads (CEO and corporate services) spending
This longitudinal trend reveals that Council is gearing up its cost shifting to incrementally allow for more future infrastructure and city planning spending, made more possible by the sale proceeds of its 2 aged care assets.
The charts show that over the last 3 years, Councillors’ collective influence on budget planning is fostering cost shifting. Cost shifting has objectives and is about cooking the books in budget gaming, and it does NOT represent operating efficiency. Budgets don’t lie, but people do.
After careful review of Monash Council’s 2014/15 draft Budget, we concluded that there is no reason why Council cannot cap rate increases to CPI level, or better still have no rate rise for next year. Rates are property taxes and they forever go up above CPI.
It is the social responsibility that Councillors help give some relief to struggling pensioners and families in Monash who are trying hopelessly hard to cope with escalating high cost of living and tax increases.
This budget allows Councillors to have it both ways – they can spend on the nice to have priorities (such as recreation and sporting areas) that give them brownie points public profiles, and they can also give financial relief to all ratepayers. They can do all these while STILL ensuring Council’s financial position is very sound!
The supporting rationale for this conclusion is based on the following key review findings:
- It is now costing ratepayers 11% more to cover Council’s operating expenses and 28.1% more in capital upgrade and new investment to deliver the current Council Plan by 2015/16 .
- Because of the aged care sale proceeds, Monash Council has unprecedented and excessive high financial capacity to pay its bills (which includes including future superannuation liability and debt payouts) and still have an unrestricted surplus cash reserves that will be worth ~$28m next year and close to $45m by 2017/18.
It is important that Councillors can read and understand budget planning, otherwise they can easily miscalculate their budget decision and prevent giving financial relief to their struggling community when they can readily do so.
MRI has concerns about what Councillors will do with the excessively high unrestricted surplus cash in future. Because Monash Council has many aspiring upcoming politician rookies, there may be risks that personal and groupthink influences can lead future decision making directions to invest in new projects or capital spends that would benefit people’s political goals and hence election achievement profiling in near coming and later election periods. Rumours are already out in the community about this risky perception, especially in the Federal Election in a few years’ time.
What has changed in cost mix?
Core services are Rubbish, Roads & City Planning. Non core services are classified under Community Development & Services, which are add-ons, often nice to have discretionary on-going spends arising from one-off projects funded by grants; projects supporting Councillors’ special advocacy wishlist items, their perceived community special needs, hidden political agendas, etc.
Next budget’s show an increase of core services’ spends and a reduction in community development services. We anticipate there will be greater investment in infrastructure and accompanying community service growth after next year. There is excessive unrestricted money to burn for this direction of spend and where this money will be used is not communicated to the community. The BIG Question is who sets & controls the investment direction for the community, as this Council advocates a culture that does things TO and FOR its community, not WITH its community.
The cost of overheads continues to rise and exceed total services’ costs – a concern and signals opportunities for improving efficiency. However, the Local Government sector is always encourage to increase rates every year for over ten years and there is no strong support for committing to a zero based budgeting methodology. The resolve and sustainability of truly committing to a “back to basics” budgeting is more theoretical propaganda than achievement commitment in real practice. Sounds good in in public budget propaganda but not quite practiced with full vigor and honesty, as revealed in the budget analysis findings.
What we experienced in Monash Council via the recent sell-off of Council’s aged care facilities (and later on in the coming budget planning cycle), is not unique to Monash.
Beechworth ratepayers are facing a similar situation with their Indigo Shire Council, who is deciding to approve funding for a project for building the Council double headquarters in two sites. Beechworth ratepayers want to know the expenditure amount and the underlying budget details of expenditure breakdown. They started asking questions in December last year, and their Council is building a transparency barrier to elude or delay answers to the public questions asked:
The transparency barrier is artfully disguised as a procedural compliance to LG Act in deciding to fund the project (see below).
It is a Yes Minister approach to constraining community engagement to block access to information underpinning a Council’s decision making matter. Ratepayers can change this game by using:
- The new Local Government Performance Reporting Framework (LGPRF) to produce a Report Card that evaluates the governance performance of this decision making matter;
- The Good Governance Guide to evaluate which of its 7 governance principles have been breached, which would then lead to the identification of underlying Local Government Act violations. An example of this Governance Evaluation report is like the one developed by the Monash community.
Ratepayers/residents can present the Report Card and Governance Evaluation report to their Council for an explanation of poor governance and if and when needed, activate escalation to higher authorities to report the community’s evidence based dissatisfaction of their Council’s lacking governance performance. This capability empowers a local community to increasing pressure for change in Council to come clean with transparency of their decision making and seriously taking accountability for their behaviors, decisions and actions.
New Cr Robert Davies has set the precedent of being the first Councillor who can conduct a cost driver analysis of Monash budget that revealed a failing service cost performance pattern (Monash Bulletin, Feb 2013), a legacy trend that Monash Ratepayers Inc (MRI) already flagged concerns in the past, especially the consequential impacts on rates setting and affordability.
It is also most timely that the recent Auditor General Office’s performance audit report confirmed that almost all Victorian Councils do not consider the impact that rates increases (hence their underlying budget increases) have on ratepayers. More alarmingly, the report concluded that the current rating framework lacked clarity, detail and direction (hence inferring that there is lacking clear and reconcilable evidence to justify rate increases) and lacks community engagement quality during budget reviews to understand the rationale of, hence underpinning budget influences on rate increases.
From a budget management perspective, MRI already knows that incremental annual budget increases without considering continuously and measurable efficiency improvements in overhead and service expenses is not good practice and undermines Council’s capacity to comply with the Local Government Act in matters of demonstrating measurable best value, including financial efficacy measures.
It is time that the community needs to realise that many of our past and current Councillors lack budget and financial management literacy! It is good to see new blood changing the mix of Councillors and who can exercise skills and has the foresight to question about internal cost efficiency deficiencies and facilitate priority address of such important matters that ultimately harm rates affordability. It is also time for Council consider switching their budget methodology to a more accountable zero based approach that checks for longitudinal service performance measures and supports continuous improvement and reconcilable transparency in Council’s budget management practice – a good practice that MRI is advocating for.
It is the civic rights of ratepayers to expect that:
- Councillors and Council officers read and understand the ramifications of the audit report;
- Council should at least start considering improving community engagement in the coming new budget planning and review;
- More visibility of budget scenario options , decision making criteria considerations and justification of option selection;
- Councillors’ public communications do not assume the community is financially ignorant or illiterate. What they say will reflect the quality of their understanding of budget challenges and underlying cost drivers breakdown and the competency level to show that they can exercise informed decision making and discourage groupthink controlled consensus in choosing the right budget option.
MRI will take an active engagement and governance role in checking responsible respect of such ratepayers’ civic rights in local budget matters.