Item: Financial Report
LIPSHUTZ: “once again a very good performance…..(surplus of $4 million) GESAC….impact on council…short term some slight impact on our (income)…(can be proud of the fact) “that we do spend our money on capital works…trees, drains, paths… …(every month except December has increased in capital works expenditure)…..’improving our drains….improving our infrastructure….(this council) spends money for the benefit of residents….good result….demonstrates once again that Mr. Swabey’s team are handling our finances very admirably….
PILLING: Basically endorsed Lipshutz’s statement and that GESAC (when it’s opened) will be a ‘wonderful facility’…at this stage of the cycle things are tight…but with good management….healthier prospect…’
PENHALLURIACK: ‘I am concerned…..(with statement that we’re in a healthy state of affairs when the Auditor General labelled this council as) high risk….for a reason….a high risk council is a high risk council…(Spoke about council’s deposits of which) 73% are (in funds which have been downgraded from triple AAA to double AA and )that concerns me because this council has always had a sound financial footing….(referred to page 9 of the report on cash flow and that the Auditor General thought that this was) important enough to downgrade council……GESAC is a problem and I don’t want to say I told you so….has a very unusual effect on our books because ($25 million dollar borrowings) and we negotiated that loan prior to 2 rate reductions (hence paying more without) any income from GESAC….even when we (get income)…it still won’t be paying back the interest….(plus) costs of running GESAC…..it’s going to have Mr Lipshutz some impact
LIPSHUTZ: interrupted with ‘Cr. Lipshutz’
PENHALLURIACK: Cr. Lipshutz beg your pardon……I think we need to look very closely at this…(spoke about increasing rates to 9% and said that in NSW they’d brought down legislation to fix rates at 3.6%) that should be a maximum for us as well….we need to look at this without our rose coloured glasses on…..see what we can do to rationalise….(we do have a) serious financial situation….and need to face up to it….
TANG: Didn’t want to comment on the report itself but just ‘the things that have been raised in relation to the report…..(said that in raising the Auditor General’s report Penhalluriack made some) ‘false connections’…’I don’t think anything is a surprise…..councillors….(would have liked) GESAC to be open in December….the fact that we’re going into 25 million dollars debt…the fact that it will have an impact on our liquidity….reserves….we won’t be delaying (capital works)….have to forego other (unplanned projects)…none of this is a surprise….(Penhalluriack made these arguments when he voted against going into GESAC)….’we knew we would be here’…’we knew that we expected that the community would pay….none of this is a surprise….(Auditor general didn’t make any connection between income. Council is high risk because) we preplanned for ….we would go into debt….for a fixed period of time. Asked Penhalluriack – ‘Are you aware of how many (criteria the auditor general used to assess council and) which factors influenced the Auditor General’s decision?’…..
PENHALLURIACK: ‘I’m not an accountant….(but respects the Auditor General’s) judgement…
TANG: ‘I think we see eye to eye on that….(did auditor general make his decision on anything) other than liquidity management which council knew was going to be an issue?
PENHALLURIACK: I don’t know the answer to that question…I would be very disappointed if that was simply the only reason
LIPSHUTZ: Asked Swabey to explain the ‘issue of council’s current status…’
SWABEY: Said there were about ‘5 or 6 ratios’….in four or five council exceeded….ratio requirements….liquidity we fell slightly under 1…the prescriptive nature of the auditor General’s assessment …..(due to current ratio)…(council runs down its funds around June or July) ‘at that point we were slightly under our current liabilities….at no stage….any problems….(always pay creditors)…..Spoke about the Strategic Resource plan and that debt repayments haven’t been delayed; interest is fixed;)…yes we do have forecast which says we will still have close to 1 liquidity ratio….we don’t expect this to be the case as of 30th June 2012….low liquidity ratio for a number of years….we expected that….high capital program…..
Hyams then asked about the consequences of being rated high risk
Swabey responded that council now has to report every 6 months on council position. Also said that liquidity ratio ‘changes from month to month’
LIPSHUTZ: Didn’t like Penhalluriack’s ‘scaremongering’….(knew what we were) ‘getting into….when GESAC is up and running and we’ve got 3000, 4000 members….I told you so…(Spoke about the past and the two pools and that the Northern memorial pool was) ‘a drain on council….unsustainable….we owe it to the community to have something that is worthwhile….state of the art pool that we knew would impose (some problems on community)….but also knew….short term pain for long term gain….this council is looked at as ….one of the best managed councils…clearly there is nothing to fear….sound….
MOTION PUT: Carried – Penhalluriack voted against.
The rest of the meeting will be reported on in the coming days.
Glen Eira Debates 
February 8, 2012 at 11:26 AM
In my experience when money is “tight” as Pilling said, then businesses generally do a couple of things. They either “rationalise” by cutting back staff, or cut back spending. If we’re to believe Lipshutz, Tang, Swabey, everything is on course and there are no “surprises”. In other words, they knew about the looming GFC and also knew that interest rates would drop to the extent they have. They would also have known about the additional spending of just on a million dollars for the car park and playground “relocation”; perhaps they even knew that gesac would not open for months and months and as the financial report indicates there is already an income loss of half a million dollars.Councillors also knew that the result of the basketball saga would mean egg on their faces and a further drop in income if all of the courts can’t be used by the warriors and McKinnon can’t get its leases sorted out. All of this according to what we’ve been told is “no surprise”. Following the logic, that would then mean that the Auditor General’s classification as high risk is also not a “surprise” – it was all planned!
In private business, heads would be rolling by now. Council simply offers euphemisms and generalities and when one councillor tries to point out the problems, his payback is to be called a “scare-monger” and that his thinking lacks “connections”. Never mind the fact that he has been in business for 20 or 30 years.
The future will tell us exactly the kind of state we’re in if rates go up and up and if projects are delayed, cut back, or even thrown out.
February 8, 2012 at 1:09 PM
Things can’t be going so brilliantly if this council isn’t yelling it from the rooftops. They’re fabulous at doing this. Now we only get silence. There’s no pools steering committee report as already noted by someone and I guess nothing was said by anyone yesterday as to when the pool would actually be open because then that would have made real headlines. This is pretty poor management. We’re only paying the bills and according to the philosophy that is rampant at this council that means that we don’t get told anything.
You only have to look at the comments that people are already making and you have to worry that the 3 or 4 thousand memberships could in the end dwindle to half that number because people are so pissed off. That would cause another huge hole in projected income. No, things aren’t rosy, but Lipshutz and his mob keep looking at stuff through their Newton provided rose glasses – or they want us to believe in these glasses. Pull the other leg please.