The folly of GESAC is about to come back and bite residents really hard. Faced with a $7.1 million bill for employee superannuation, councils have the choice of paying their share off in one lump sum or spreading the repayments out over 10 or 15 years. Glen Eira, because of GESAC, would not have this choice we believe. By borrowing $25 million they are already over committed and no bank in its right mind would lend them any more. The result is that in all probability Glen Eira will be paying off its dues over the extended time period. That means more money down the drain in interest and an inevitable huge rate hike to meet all the bills.
Other councils such as Bayside ($5.1 million) and Nillumbik ($4.78 million) and probably countless others are endeavouring to pay this amount off in one hit. Both will borrow in order to avoid unnecessary expenditure on interest – but they are capable of doing this. For Glen Eira, we would wager that there is not this option. Instead we will be facing years upon years of endless interest repayments.
Serious questions need to be asked about the financial management of this council. Why is there no substantial ‘nest egg’ to cover such unexpected emergencies? Why have all our eggs been placed in the suspect GESAC basket, and now everyone’s got egg on their faces! Why in this cash strapped council that was designated as ‘high risk’ less than a year ago and has only managed to climb up to ‘Low risk” by delaying Duncan McKinnon for over a year, plus other capital works programs, do we have to witness the pathetic squabbling over whether to spend $16,000 for a lolly pop person or other safety measures for our kids? Yet, there’s no problem in finding another $1.5 million for car parking at GESAC.
By our reckoning this council will be facing an interest bill of at least 3 to 4 million dollars per year for the next 15 years. This figure is based on the Nillumbik calculations and the document which was sent to all councils with their individual calculations. (uploaded here) .We have to wonder whether councillors even got to see this paper? Here’s the important page based on Nillumbik’s share of $4.78 million. When the maths are done for $7.1 million then the interest is astronomical.
What is required is the complete tearing apart of all financial records by a government appointed forensic accountant. More importantly a full blow by blow costing for every single nail that has gone into GESAC. We have absolutely no idea of how our money has been spent, nor how much it costs to keep this place running on a daily basis, nor how many members have not resigned once the novelty has worn off, nor how many staff are being paid for by residents, nor how much subsidy the Warriors are receiving from ratepayers. The questions are multitudinous and the responses non existent. That is councillors’ jobs – to not just ask, but demand and then to ensure that residents know exactly how and why their funds have been spent in this unaccountable and non-transparent fashion!
For starters no amount of spin, bluff and bluster can hide the fact that GESAC has incurred additionals costs that have never been either reported upon, nor directly associated with its construction. We highlight just a few:
- Lawyers for the ‘liquidated damages’. What happens when council is perhaps found liable to pay the difference, plus punitive damages, plus more interest?
- Why isn’t the construction of an electricity substation, plus road works and traffic lights included in the ‘construction costs’? The figure of $41.2 million is thus not only disingenuous, but totally bogus when one considers the money that has been forked out to facilitate the actual ‘construction’.
- What are the insurance costs? why the need for a higher purchase agreement?
- What are the heating, cooling, cleaning, maintenance, etc. costs? How much does this tally per day, per week, per month?
Over to you councillors! Do you have the courage?
Glen Eira Debates 
February 20, 2013 at 4:31 PM
Transparency has been a perennial problem in Glen Eira. No more so than with the financial accounts. Very little is spelt out so that residents can follow and categories are so wide and ultimately misleading that it becomes a guessing game as to what the money has been spent on. The monthly financial reports have such labels as “other expenses”, “community safety” and numerous other titles of the same ilk. I would like some definitions and some clarity as to what these actually mean and where this money has been spent. Putting down sums on a page does not tell anyone anything, much less about the quality of the alleged work. Gesac has been the prime example where some figures have been provided but not the detail that is required for complete openness and transparency. When councils are dealing with projects of this magnitude then it becomes even more essential that the accounting is visible, and accurate.
February 20, 2013 at 9:06 PM
Perhaps our 2 glorious long long long standing “independent!” members of the Glen Eira Audit Committee Gibbs and MacLean will save us all. Ha ha ha. Too busy feeding Newton and Burke grapes. Glen Eira is dying and the gang are fiddling.
February 20, 2013 at 10:14 PM
If GESAC earns enough to cover interest costs then your entire story goes out the door.?
February 20, 2013 at 11:11 PM
The bottom line in accounting is very straight forward. How much does it cost to run and set up? How much money are you bringing in daily? and if there’s profit from this tiny sum, then you’re ahead. Building the place would have cost at least 50 million by the time you add in all the outfittings, software, and furnishings. Then there’s lawyers, architects, and on and on we go. Money pouring out of the coffers. Next staff costs of how much? 3 million, 4 million, 5 million. That would bring it up to around 60 million in outlay. So even if you get a million visitors a year it will take centuries until this joint breaks even. Don’t forget the other “incidentals” mentioned in the post – car parks, lawyers, blah, blah, blah. Interest is the least of council’s worries on gesac. That’s a drop in the ocean compared to the outlay that’s already happened. We’re broke and going to be even more broke. Get ready for a 10% at least rate hike. How do you like them apples? Are Newton and Swabey still god’s gift to sound financial managment and the dumbo gang councillor gurus, or moronic lackeys?