FINANCIAL REPORT

LIPSHUTZ: council is again ‘progressing well’ and that GESAC is doing a lot better than council ‘anticipated’. They’d originally been looking at a $300,000+ ‘surplus’ but this has now gone out to over a million dollar surplus. Claimed that GESAC is now covering ‘all its borrowing costs’ but not ‘operating costs’. There are over 8,500 members and that he ‘anticipates’ that it will be ‘covering operating costs completely’. Also noted a sentence on page 2 where there ‘was a transfer of $136,000’ from a maternal child & health centre to GESAC for ‘heating and ventilation’. Said that this ‘wasn’t so much a transfer of funds’ out of the health centre but that council were thinking of ‘redeveloping’ the centre staff room. ‘Council decided that when they looked at the plans….it wasn’t worth doing….and as such it didn’t occur’. The money was therefore ‘surplus’ and now used for GESAC. Because GESAC is ‘so heavily used’ and there are lots of people in the centre that ‘we needed to lower the temperature’. ‘We don’t ordinarily remove funds from’ one project to another. Noted that what the Auditor General had said was that unlike other councils, Glen Eira has a ‘business plan before we do anything’ and if ‘it doesn’t stand up, we don’t do it’. So when officers looked at the issue of the staff room it didn’t ‘stack up’…’and as such it didn’t happen’. Went on about ‘operating costs per assessment’ – Glen Eira has one of the lowest & rates and charges are also one of the lowest; ‘fourth highest for pensioner rebates’ and ‘third highest for grants and subsidies’ and 3rd highest in capital works. Said that in some other councils the criticism is that money should be used ‘to pay back debt’. Claimed that was ‘poor’ because it would mean the degradation of facilities and ultimately cost more to replace.Glen Eira has a ‘rolling program’ that means they ‘keep things moving’ ‘so we don’t have to spend money’….’cost saving’. Summed up that it was an ‘excellent report’ which shows that ‘council is on track once again’ and that Glen Eira is a ‘template’ for quality and other councils.

DELAHUNTY: disagreed with Lipshutz on Auditor General’s report. Said that council had been asked to maintain a liquidity ratio somewhere ‘greater than 1.5’ and the report clearly says that over the next few years it will remain ‘around 1’ so there is a need for ‘caution’ with cash flows, ‘so there is a need for concern’. Said that congratulations are due to GESAC but it’s not yet ‘paying for itself’ since it costs council $1 per visit. Agreed with some of the things Lipshutz said but the liquidity ratio needed some caution.

HYAMS: said that Lipshutz is ‘adamant’ that all surplus should be ‘spent on capital works’. Spoke about the $7 million dollar debt for the Benefits scheme which council was ‘going to be charged 7.5% interest on’ that there are ‘grounds to consider’ whether some of the debt should be paid off sooner. ‘That’s a discussion we will all have no doubt’. Referring to Delahunty’s comments on the liquidity ratio agreed that ‘yes it is something we will need to keep our eye on’ but he ‘wouldn’t say it is cause for concern’ but a ’cause for caution’. It’s only ‘one indicator taken in isolation’ and overall ‘we are in a very sound financial position’ and that the report ‘reflects that’. Said that council is generally conservative in its forecasts so that the projected liquidity ratio is of this ilk and will stay ‘well above’ the 1 figure.

LIPSHUTZ: said that Delahunty ‘didn’t have the benefit’ of being present at the Audit committee when the Auditor General came out. The AG was ‘very satisfied’ with the ways things were being handled, congratulated them in fact and that ‘council was handling (things) very, very well’. ‘There was nothing of concern at all’….’we have to be cautious, we have to watch our ratio’

CARRIED UNANIMOUSLY

COMMENTS:

We freely admit that we are not accountants. Yet, some of the revelations ensuing from this item we find to be extraordinary. For the first time we learn that the Employee Retirement Fund cost of over $7 million is to incur a loan of 7.5% interest. Council has repeatedly claimed that the first $3 million plus, that is due to be paid by June 2013 has already been budgeted for. Does this therefore mean that council over the next 15 years can’t find a meagre $4 million dollars to pay off this debt? More significantly why are they locked into an interest rate of 7.5%? This is surely astronomical given today’s falling interest rates. Is this a sign that Glen Eira Council is in fact viewed by lenders as ‘high risk’ and hence the high interest rate? Why must there be any borrowing at all for a measly 4 or 7 million unless the cash flow is indeed on very parlous grounds?

So, for all the talk of being ‘on track’ and how wonderful this council’s finances are, there are countless questions that need answering and figures that reveal the absolute truth. Here are some further questions to ponder:

  • If Glen Eira is so wonderful with its ‘business plans’ then how can a budget be approved, funded, and then suddenly money is withheld from a child care centre and transferred to GESAC?  The actual sentence referred to by Lipshutz reads: “Transfer funds of $136K from Caulfield MCHC to GESAC HVAC works to cover the expenses on the additional HVAC plant”. Since these acronyms would mean nothing to 99% of residents, surely it is time that an important document such as this was made intelligible to people? More importantly, what does this again indicate about the overall planning and astuteness of the entire GESAC project? How often has this council ripped money out of one agreed to project to cover the costs of another?
  • Why has so little money been spent on other projects? Are they being delayed because there simply isn’t the money to go ahead with them? Lipshutz argues that ‘surplus’ is spent on capital works, yet over $10 million dollars is carried through from LAST YEAR’S budget! If that’s not delaying projects to an inordinate amount, then we don’t know what is!
  • The public deserves a fully itemised ledger on exactly what GESAC is costing. Figures cited in these reports need to be fully DEFINED. For example: do the ‘expenses’ listed for GESAC include interest repayments, staff costs, or are they simply everyday costs, such as heating, maintenance, etc? Without clear definitions the public is lost. Of course, this may all be deliberate!!!!!! It is definitely time for less spin and more upfront and detailed accounting!