You do the sums, MidCoast Council’s costs don’t add up!
Ratepayers can only hope MidCoast Council (MCC) staff have now settled comfortably into their new capacious offices in the refitted Masters’ building in Taree, and that positive change is imminent post election.
It is revealing to see the actual status of the promised savings in amalgamation of councils and the subsequent controversial move to Masters.
Figures are Shockers
Given the disastrous figures, can ratepayers rely on future commitments made by MCC? Does this grand move to Masters stack up? Or do we need people in council who can actually add and subtract?
In promoting the imminent amalgamation of councils in 2016, ratepayers heard the repeated promises of reduction in costs, promises of improvement in services and then the bold promise of reduction in staff costs.
Staffing is the key “Operational Efficiencies” item that in the eyes of MCC we were told justified the office centralisation move to Masters. Without this, the final benefit-cost-analysis on which the Masters’ centralisation case entirely relies, is in tatters.
All councillors except one (Cr Peter Epov) approved the Balmoral Group Report presented to Council at the April 2019 meeting (refer: MCC website, Meeting Agendas and Minutes, April 10 2019 Ordinary Meeting Related Information: Item 8A). The report states: MCC “indicates” the move to Masters’ will deliver a reduction of 25 staff through “staff efficiencies”, savings of $1,937,500 per annum, $25,561,372 over 20 years – the evaluation period used in the financial analysis. The latter figure is the key foundation stone supporting the financial case and the report’s conclusion that the Single-Site Option (Masters) “provides benefits outweighing costs over the 20-year time period of evaluation”.
(Excuse me while I choke on my toast! Have you seen the endless ads for council staff? Ed.)
Well, how does it stack-up? I know it is early days yet, but can we get a reading six-months into the 20/21 financial year? You would expect that at this stage staff should know their way around Masters and have a clue about the council’s financial health.
Item 8B is the 10-year Long Term Financial Plan (LTFP) produced by MCC administration in support of Item 8A. It gives income and expenditure figures per year projected over 10-consecutive years. Employee costs are itemised as Employee Benefits & On-Costs with a 20/21 budget figure of $80.83 million. There is no separate figure for Consultants. Most likely that budget item is included in the foregoing employee costs item, otherwise the integrity of the reports and accounting system are in question.
(Looking at their fees I’m coming back as a Consultant in my next life. Ed.)
Using the latest Quarterly Budget review Statement March 2021 (Ordinary Meeting 2 June 2021), employee costs are $91.38 million and Consultants $4.3 million So mid-way into 20/21 the revised blow-out is a total of $14.85 million in just these two items. The figure of $4.3 million is equivalent to 54 staff at the current average employee salary. And as at 30th June 2020 the total full time equivalent employees was 819 and this had increased to 884 by 30/06/2021 as per councils financial statements, with many current positions unfilled at that date.
These figures are from MCC’s and approved Consultant’s reports. For ratepayers who suffered a 20% increase in council rates over four years just one-year into amalgamation – in breach of State government commitment not to increase rates – this blow-out revelation is bitter news. No wonder the car park at Masters’ looks like a major football match is in progress.
And that’s not all the bad news!
After four years of amalgamation ratepayers ask where are the promised savings? Masters followed the State government decision to merge. Looking at how private enterprise achieves reduction in costs from consolidation of separate businesses, a 20% reduction in employee costs (including consultants) is likely achievable and not unreasonable in merging three separate entities.
Using LTFP, figures, the potential reduction is $16 million: $80 million times 20%, How long will ratepayers wait to see this reduction? What about rationalisation in many other budgetary items?
This blatant disregard for responsible financial management is an abhorrence for all ratepayers who supported amalgamation in the naive anticipation that one council is better than three and normal economy of scale and responsible financial management will bring down costs.
How dumb were we!
Without drastic immediate action this blow-out in expenditure will continue every year.
Ironically, this flies in the face of the recent (April 2021) premature and unjustified extension of the (MCC) rookie General Manager’s contract, coupled with a ratepayer eye-watering salary increase of $80,000 to $430,000. (This is his first major appointment as a GM.) We ratepayers need to ask why this was not part of a proper transparent and accountable performance review?
This is just one of a number of key-performance criteria Councillors should have in-place and applied for GM performance review and tenure. Ratepayers should be very irate at this further unjustifiable squandering of funds desperately needed for local roads. The Councillors who approved this without proper review and accountability do not provide due and responsible service to the ratepayers they represent.
Another recent case of obfuscation was the absence of the LTFP at Council meeting 28 July 2021. The Minutes record “that the Long Term Financial Plan covering the period to 30 June 2031 be noted”. So where is the report? Why no disclosure? This report in particular will reveal levels of debt, changes in revenue streams redirected to fund Masters and other excesses and blow-outs in expenditure. This long overdue LTFP needs immediate release for ratepayer scrutiny.
New councillors need bold courage and determination, armed with a sharpened chainsaw to slash this bloated mass and to bring the Administration to immediate transparency and accountability.
Ratepayers need to voice their disapproval so that it echoes and reverberates within the walls of Masters and vote accordingly.