At the height of the CoronaVirus in March, when the NSW Government was instituting social distancing measures and placing restrictions, MCC Councillors and the General Manager were determined to approve expenditure measures related to the Masters Office Centralisation fitout, so they convened a full public meeting despite calls for a postponement.
Now, when all the restrictions are being removed and deregulated and many Councils throughout the State have already resumed full meetings, MidCoast Council has decided to continue with internet meetings until 2021. Seems there is concern for our councillors’ fragile welfare, despite that now the public can shop freely, go to the pub, attend weddings, football matches and other public events (with some restrictions), but not an open Council Meeting of 11 Councillors?
There is a recording circulating in the community considered an eye opener to anyone who hasn’t been to a council meeting. In the portion of the council Zoom meeting on 27 May, it sounded more like a spat in a henhouse than a civilised council meeting. Especially when some councillors (apart from Bell/Keegan/McWilliams) attacked Cr Epov who had the temerity to raise a few queries about the budget and the Mayor let it go on.
No wonder the council heavies don’t want the public to witness council meetings.
The Integrated Planning and Reporting Framework (IP&R)
In 2009, the NSW Government introduced the Integrated Planning and Reporting (IP&R) framework to change the ways Councils in NSW planned, documented and reported on their plans for the future.
In essence this is the community’s, not Council’s, aspirations for up to the next ten years and how to achieve these strategic goals.
The IP&R Framework requires a reporting structure to communicate progress to council and the community, as well as a structured timeline for review to ensure the goals and actions are still relevant.
Many Council’s throughout NSW have successfully adopted this process but have refined it to being inclusive of the community through a process that provides not only transparency and accountability but builds confidence and trust within the community.
How it should work.
In late May MidCoast Council placed its IP& R documents (including the Delivery Program and Operational Plan) on public exhibition, however the crucial Long Term Financial Plan (10 years) was not exhibited, nor was it produced last year.
The absence of the Long Term Financial Plan (LTFP) means neither councillors nor the community know where the organisation is going in relation to debt and commitments. It also means the organisation has no long term direction and therefore a lack of transparency and accountability.
The continued absence of the LTFP also means it is difficult to factor in the consequences of major projects such as the Masters Office Centralisation, the now stalled Forster Civic Precinct and the Roads program, where council has undertaken to borrow $50 million over four years, but will need to pay it back over 20 years – creating intergenerational debt.
A further example of this intergenerational debt that has not been factored into a Long Term Financial Plan is the recent decision by Council on a vote of 6 to 3 (opposing were Crs Epov, Bell and McWilliams) to borrow $11,500,000 over 20 years to pay for the Masters Office Centralisation project. It appears that the much criticised Financing Strategy has now floundered and the proposed borrowing for Masters has jumped by 43.75%.
Transparency and tracking plans
MidCoast Council has also adopted a further curious practice in that its four year Delivery Program has absorbed the One year Operational Plan, making it very difficult to measure and track performance on an annual basis. Why?
Due to amalgamation MCC only has a three year Delivery Program and the 2020/21 financial year will be third year of that Program. So prior to the Councillor election next year, the community will have the opportunity to track how the Council has performed in all the promises that are made in the Delivery Program.
Financial Elements of the IP&R
Curiously MCC did not take up the offer of the NSW Government to delay the publication of IP&R documents by a month to factor in the consequences of the CoronaVirus and now the recession, but even more strangely, they delayed the publication of the March Quarterly Budget Review Statement (QBRS) until 24 June.
Surrounding Council’s such as Coffs Harbour, Kempsey, Port Macquarie Hastings, Newcastle, Lake Macquarie and even Dungog were able to produce Quarterly Budget Reviews on time, in May.
To business people, Quarterly Budget Review Statements are very important tools to measure the performance of a business or an organisation. Usually the most critical is the 3rd Quarter (March) Budget Review Statement which provides a strong direction as to how the next year’s budget should be framed.
The MCC Administration’s giving Councillors and the community only five days to process the documents and respond with submissions to the Budget by the closing date is clearly not an incentive for community participation.
Former Greater Taree City Mayor Paul Hogan commented,
“This is really disappointing after 4 years of amalgamation Council is unable to produce a clear and concise budget that informs the community in a user friendly way. I can’t understand the logic of bringing forward the Budget but delaying the Quarterly Budget Review Statement. There are just so many questions.”
Perhaps the most significant issue with MCC’s exhibited financial documents is the lack of correlation between the Operational Plan and document described as the “Budget”, is a document of 70 pages and thousands of entries mostly inexplicable and without explanatory notes.
The Budget documents do not list a comparative column to the previous year.
Certainly this is not a document that the average person can pick up and quickly understand, which rather defeats the purpose.
Our Mayor’s proud boast that MidCoast Council had been spending on average over $69 million a year on roads and bridges also gets further pummelled. In the recent Council Meeting the Administration revealed that Council will now not be borrowing the proposed $10,182,500 for Roads which was identified in the 2019/20 Budget – a sum which was listed to be matched by a NSW Government Grant of a similar amount through that strangely named $100 million Roads Program.
However, Council does intend to spend $48.5million on Roads this financial year which is not to be sneezed at, but criticism is emerging on how and where this money is to be spent.
Council is only allocating $9,375,000 million on Roads (to be matched by and equal amount from the NSW Government of $9,375,000), out of a possible total pool of $25 Million in the 2020/21 Budget.
The much lauded $100 Million Roads Program, was promised to be over 4 years; but the longer it takes to deliver, the less additional funding we will receive for Roads in the long run. Particularly, as Council has now effectively deferred $20,365,000 of road works from the 2019/20 Roads Program by setting aside the proposed 2019/20 borrowings. Council’s total contribution of $50 Million to the $100 Million Roads Program was predicated on low interest borrowings to be paid off over 20 years through the 2017 Special Rate Variation (SRV) which increased our rates. So while we ratepayers are contributing the money, Council is not keeping their side of the bargain.
We are experiencing extremely low interest rates at this time, which suggests Council should be taking greater advantage of the opportunity to drive our dollars further. Originally Council’s $50 million share of the roads program was calculated on borrowing at interest rates of 4% plus, but now with record low interest rates certainly over the next 5 years Council could be borrowing at between 1.5% and 2% meaning that this $50 million could be paid off much faster!
This raises the question; is Council actually banking the additional SRV funds into a separate account and quarantining them specifically for the $100 Million Roads Program to pay off the loan/s, or are these funds being spent in other areas?
March Quarterly Budget Review Statement for the March Quarter, raises more questions than it provides answers. ‘Council’s Consolidated Net Operating Result before Capital Items’ stands at a deficit of $26,554,000 (all in the very small print on page 117 of the Report) with the original budget projection having been a deficit $14.5 million. This has nearly doubled and there was still one Quarter to go. One can only wonder how this has factored into the 2020/21 Budget.
Employee Costs have risen from the budgeted $79.8 million to $85.2 Million in the March Quarter, and we are told there is nothing to be concerned about, and yet the 2020/21 Budget is projecting Employee Costs of $92 million, which we would make it a 34% increase over 3 years.
Er, wasn’t the amalgamation supposed to save us money?
Perhaps an even more striking figure is that of the expenditure on ‘Consultants’ which was originally budgeted at $2.68 million but has risen to $6.62 million, a spike of 247%, with still 3 months to go!
The CoronaVirus may have extended this Council’s term for a further 12 months, but what it has also done is to put the Council on notice – We expect you to achieve everything in the Delivery Program and the Operational Plan, and we expect far better financial management.
We ratepayers work hard to pay our Council and Water rates, so we expect these funds to be managed well and to be transparent and accountable.
For the community to develop trust in Council, it does not require slick advertising campaigns, or obsfucation, but just plain honesty!