This is our first preliminary look at the proposed budget. It is admittedly a very pleasant surprise that the rate increase will be kept to 6.5%. It is however worth pointing out the rate increases at neighbouring councils –
Manningham – 4.8%
Whitehorse – 4.1%
Kingston – 4.45%
Port Phillip – 4.5%
Bayside – 3.5%
Stonnington – 4.3%
Boroondara – 4.7%
SUPERANNUATION LIABILITY
Glen Eira has decided on the following strategy – “ The Defined Benefit Superannuation Call will be paid off over three years (before the next Review comes into effect) without reducing services of capital investment or increasing Rates”. This is presented as $2.4 million repayment the coming financial year and then $2.3 for the following 2 years. We do not know the interest rate on this debt!
Other councils have opted for different strategies and their comments are worthy of note –
Council’s Budget and Strategic Resource Plan shows that Council has forecast to borrow $7.90 million during 2013/14 to repay a liability Council has to the Vision Super Fund for a shortfall in earnings by Vision Super to meet its actuarial forecast for payments to defined benefits superannuants. This borrowing is consistent with the Financial Strategy as the alternative to borrowing is a debt repayment schedule offered by Vision Super with an effective interest rate of 8.82%: bank loans are lower than the Vision Super rate and therefore are an economic alternative. (Manningham)
The increase in net cash inflows from operating activities is primarily due Council paying $9.78 million to Vision Super in August 2012, being the discounted call amount for Council’s share of the Local Authorities Superannuation Defined Benefits Scheme liability shortfall.
In August 2012 the Local Government Defined Benefit Superannuation Scheme sent us an invoice for $14.3 million to cover our share of the shortfall in employee superannuation. It is payable immediately after 1 July 2013. This impost presents us with a major financial challenge not of our own making. While a likely shortfall was noted in last year’s budget the actual amount was well beyond what we expected. Because we don’t keep that sort of surplus cash in the bank, we will borrow to repay the liability in full – taking advantage of the relatively low interest rates currently available. In addition, we will repay the loan in just five years at an annual cost of $3.3 million. This strategy will save ratepayers over $9 million in interest compared to a standard twenty year loan. Our rate rise this year could have been a little lower but the savings we achieve with our approach will give the community a much better result (Boroondara).
There’s therefore much that is not revealed. Is Glen Eira ‘borrowing’ from the Vision Fund at 8.82% per annum? Did they investigate any cheaper bank loans? Would any bank even give them a loan since recent borrowings totalled $25 million? Clearly Glen Eira was never in a position to pay out up front. The result is probably millions in further interest repayments.
FEES AND CHARGES
- Many of GESAC user costs have increased. What impact will this have on membership and attendance? Why the need for these increases? Isn’t this a case of killing the goose that laid the golden egg? Is this why there’s the neat little rider in the budget about handing control to increase prices to the Manager of GESAC?
- Bin charges go up and up again – 240 litre bin up by another $17 to $377 pa and the 120 litre bin up by $8 to $173 pa.
- Child care fees up again – $5 per day for 3 to 5 year olds to $100 per day.
- No figure provided for council’s actual contribution to pensioner rebate. Has it gone down?
- Staff numbers keep increasing – another $5million in staff costs and numbers up by 28 for EFT
OPEN SPACE
There’s a welcome addition in terms of open space via the statement: “As part of the current budget process, Council will adopt a Policy that all Public Open Space Contributions will be used solely for the acquisition of additional public open space or the upgrading of additional public open space for community use. Contributions would not be spent on existing open space. (Additional open space includes the disused Glen Huntly Reservoir)….In 2013-14, the Budget provides $250K for the upgrading of Elsternwick Plaza, owned by VicTrack”.
The budget also contains this plan – $5 million in 2015/6 and $4.5 million in 2016/17 for the Booran Rd Reservoir. Last year the budget papers had it down as – 4 million in 2017/18 and 3.5 million in 2018/19. So, the ‘redevelopment’ has been moved forward a year or so, but the estimated cost has escalated another 1.5 million. In other words, all that has been gained by this ‘policy’ is not MORE open space in the next financial year but some neat account balancing.
We ask: is the above more sleight of hand, especially since only $250,000 has been made available in the upcoming financial year. What happens if a property does suddenly become available? Will council even consider its purchase?
This is our most important comment however. Council estimates that the open space levies for the coming year will only bring in $2 million. Last year the figure was $1.9 million. Given that there are over 1000 subdivisions in Glen Eira per year, and at least 20 to 30% of these would be for 3 subdivisions and more, then an increase of a piddling $100,000 is quite unbelievable. So how many developers are thus being let off the hook? And why is there no mention of the potential increase in the open space levy given that countless other councils are exacting at least 5% across all of their municipalities.
We will comment further in the days ahead once we’ve had a chance to go through the budget in greater detail.
PS: there is one current ‘innovation’ in this budget that rears its head for the first time. In all previous budgets Council saw fit to include after each category the FINAL FINANCIAL FIGURES for that category in the User Fees & Charges – for example: “Total Asset Management”; “Total Glen Works”; “Total Property and Facilities” etc. This year, no such figures are provided! Hence residents have absolutely no idea how much revenue is brought in for each of these individual categories. Transparency and accountability have again taken a huge hit, despite the Auditor General’s recent report on the need for councils to justify every single cent in language that is accessible, and comprehensible!
Glen Eira Debates 
May 4, 2013 at 8:27 AM
Looking at the Defined Benifits Super scheme makes one ponder the wisdom of our forefathers. On one hand they built durable infrastructure that has stood up well past its use by date. Drains, sewers even the old town hall.On the other hand they could not have designed a worse super scheme that will pay some up to $100,000 per year and indexed. Go figure.
May 4, 2013 at 11:19 AM
The figures for drains, roads and so on, are generally the same as the figures that were produced in last year’s budget and council plan. The big difference is that with rising costs for labour, materials, contractors and general staff, this means that less is being done. Services are not keeping up with inflation. We are getting less for the same amount of money. I would have thought that with recent flooding and the prospect of this becoming worse that far more would be spent on renewing and cleaning of drains.
May 4, 2013 at 6:07 PM
Nothing has changed in the community plan. Same old garbage even though there was supposed to be a major update when the census figures became available. Pilling even said he would have preferred last year’s plan be put on hold until this year so that they could get the full picture. It’s just a glossier and more expensive version of what was already there. You’d think with all the developments going on that census figures would be essential so that proper planning and changes could take place. Not here though. It’s full steam ahead with what was pushed through last year. They don’t even have the decency to give a reason why the community plan wasn’t touched even though they’re supposed to review it. Terrific job councillors. That’s earning your dough.
May 4, 2013 at 9:39 PM
Understand that Hyams has been drawing $80K plus since last 2 years perhaps more than he earns at the Jewish newspaper. Does he have job descriptions as a Mayor? Two years in his position and he still sends dodgee responses to residents.
May 5, 2013 at 9:39 AM
Hyams was not employed at a newspaper. His election blurb described his position as “policy analyst” at a non profit org.
May 5, 2013 at 12:13 PM
Councillor Hyams is a lobbyist for the Austalia/Israel Jewish Affairs Council isn’t he?
May 5, 2013 at 12:51 PM
He is not a lobbyist. He writes and analyses political information that is relevant to Australia/Israel relations. That is not a lobbyist. At the present he is Mayor of Glen Eira.
May 5, 2013 at 5:33 PM
The AIJAC is a pro Jewish propagandist organisation. Let’s not re-write history here.
May 5, 2013 at 9:47 PM
Based on that alone he fits the job as mayor perfectly for the Caulfield demographic. That same demographic I’m pretty sure would vote with their community strings when it comes election time. The question that maybe needs answering is a person with that political background going to represent minority Glen Eira communities such as groups from the middle east region for example.
May 6, 2013 at 7:14 AM
Politics is not always what you want it to be. For instance, 17% of Australian workers belong to a trade union. The ALP is the political wing of the trade union movement. They are running the country. No one is saying they trade unin movement that sets out to improve the lives of there members is a bad thing. That is just politics. The Jewish population in Glen Eira is probably a bit more than 17%. Cr. Hyams is the Mayor of Glen Eira.
May 6, 2013 at 1:35 PM
You mean Hyams a toss of the coin Mayor? Do you know him? Ask people who have worked with him for 3 terms and particularly those who have left the Council. He is much more than an eel. Ex-Mayor and Councillor, Helen Whiteside lives in Caulfield, ring her and ask for her experience with him, Lipshultz and Esakoff.