Responsible Financial Management
Background
The City of Port Phillip has over 90,000 residents, who expect Council to deliver
a high level of basic services such as roads, cleaning, child care centres, services
for the elderly, animal management, family, children and youth services, libraries,
cultural development, waste management etc.
A fundamental proposition is that Council administration has an obligation to ensure
that resources allocated to meet these varying needs are managed in a responsible
and accountable manner.
The Port Phillip Council has failed to do this.
In 2007/8 an independent survey, initiated by the council itself ,revealed that
there was a 17% drop in the members of the municipality who thought they got value
for money from their rates. Only 62% felt that Council was providing value for money.
A Department of Planning and Community Development survey indicated an even bigger
problem. Only 50% of the community are satisfied that the council engages them in
decision making on key local issues. Small wonder given that Council has been wasting
our rates and general revenues on a bloated bureaucracy, misplaced priorities and
non-compliant tenders.
It is worth reviewing these current failings to better understand the urgency of
changes that are needed. The ratepayers and residents of Port Phillip need a new
direction in the financial management of the municipality.
Bloated Bureaucracy
In 2008 the City of Port Phillip received rates revenue of $71 million, in a total
revenue of $130.4 million (excluding extraordinary, one off items). Whilst total
revenue increased by around $4.8 million on the previous year, it is interesting
to note that total expenses increased by $8 million in the same period, almost half
of which is due to increases in employee benefits and external contracts.
Rate revenue from residential, commercial and industrial properties increased by
5.3% in 2008, which was significantly above increases in the Consumer Price Index.
Employee expenses increased by 7.7%, significantly greater than the council’s rate
revenue increases and significantly greater than inflation. There are 500 staff
or around one full time Council officer for every two hundred of us ordinary folk.
There has been an explosion in senior appointments: in 2008 the number of senior
officers increased from 19 to 31. This indicates that the Council has allowed a
bloated bureaucracy to determine spending. How our money is spent is essentially
decided by the officers and rubber-stamped by the Councillors.
The culture of the Council officers is not one of serving the community, it's one
that they know what is best for us, and they have been largely successful in persuading
the current Councillors to endorse their actions. The responsibility for setting
the tone of the administration and creating a culture that serves the community
rests with the CEO. The City of Port Phillip and the community need and desire a
public spirited Chief Executive Officer (CEO) who acts with integrity. We make no
secret of the fact that we blame the current CEO for the current culture of the
organization.
Residents report that when they ring the City of Port Phillip about an issue they
get the “run around” whether to get a park tree trimmed or on major issues about
running backpacker hotels or a traffic safety problem. It is difficult to access
the system and find someone accountable for the matter. This may be exacerbated
by the outsourcing of Council services, if these are not managed properly.
Misplaced Priorities
Numerous examples can be cited of waste, mismanagement and misplaced priorities.
Some are:
- Spending over $20 million (and over budget) on its new offices in St Kilda
- Wasting hundreds of thousands of dollars in attempting to push through a skate park
in an inappropriate part of Albert Park
- Mismanagement of the South Melbourne Town Hall
- Slashing the recurrent funding for child care
- Selling children’s playgrounds and attempting to sell the Mary Kehoe Community Centre
The worst examples of financial mismanagement come from an examination of the council’s
tendering processes.
Tender process in crisis
There have been many recent instances of bad decisions and poor management within
the Council bureaucracy. Consultants being hired and their engagement extended without
following the requirements of the Local Government Act is disturbing. That current
Councillors have attempted to whitewash these mishaps and have supported the current
CEO whose job is to manage the bureaucracy and its financial affairs properly and
efficiently shows contempt of the Local Government Act and the community at large.
In the Shahbaz affair, the Council employed a self-proclaimed ‘white witch’ to provide
organisational change, a new performance management system and a new business planning
and reporting system. This resulted in organizational disruption, claims of illegality,
staff unrest, an inquiry by the State Government and costs to Council of $1.2 million
- $600,000 for the contractor, $200,000 in legal fees, $400,000 for a one day paid
leave to apologise to staff.
It was subsequently revealed that an officer handling contracts and tenders was
alleged to be acting corruptly. He had two part-time employment contracts: one with
the Council and the other one with a developer. From his Council base he was letting
contracts to his this other party in breach of Local Government requirements.
Furthermore a report to Council in September revealed that over the past two years,
millions of dollars worth of Council contracts were awarded in breach of the Local
Government Act.
The Ombudsman is now investigating some of these matters. This action on the part
of the Ombudsman is unique in the history of this State. The Councillors have hidden
behind the Ombudsman's enquiry and refused to say what they knew and when they knew
it in relation to these matters. By shielding themselves behind the enquiry process,
Councillors, together with the CEO, have warded off claims that their oversight
of management issues may have been deficient.
unChain Port Phillip commits to turn around this rot to achieve responsible, accountable,
financial management for the benefit of the municipality
Action Plan
unChain Port Phillip commits to:
- a target of rate revenue increases no greater than CPI;
- an immediate review of Council’s internal structures and processes and service culture
of the organization;
- overseeing a new direction in the administration, with rigorous controls to ensure
council revenues are spent in the interests of residents and ratepayers, not the
council’s officers;
- ensuring all policy and activity are measurable in terms of outcomes, productivity
and fiscal responsibility;
- ensuring budgets are comprehensible, competently prepared, and open to scrutiny;
- monitoring of all programs to ensure maximum benefit to the community;
- increasing scrutiny to ensure Local Government Act requirements in regard to City
of Port Phillip tendering processes are followed every time;
- observing the law regarding council tendering - after the elections we will immediately
examine tender administration arrangements pending a fuller review after the Ombudsman's
Report is handed down;
- ensuring the Audit Committee is adequately resourced to provide ongoing scrutiny
and
- ensuring contracts and consultancies will be prudently sought, issued and monitored.
Two important methods of achieving these commitments are appointment of Council
District Officers and a Cabinet and Portfolio Approach to government.
Cabinet and Portfolio Approach to Governance
UnChain Port Phillip will immediately implement a new way of working with the bureaucracy
to ensure a more informed decision-making process and improved Councillor accountability.
A new Council will consider allocating different areas of Council activities to
each of the elected Councillors on the model of Federal and State Ministerial portfolios.
Some advantages are that:
- the particular expertise of each Councillor can be best harnessed;
- it encourages Councillors to work together and think in terms of the improvement
of the whole municipality and
- it allows Councillors to relate to the bureaucracy better – with each Councillor
developing expertise in particular areas, the council collectively is better able
to ensure decisions are made in the community’s interests.
Appointment of Council District Officers
A more open exchange and a genuine focus on community input based on a District
Officer model adopted in Woking Council in the UK.
unChain Port Phillip suggests the appointment of three to four District Officers
(DOs)for each Ward (from the current Council bureaucracy, so there should be no
extra cost for this initiative) who each have a third (or quarter) of the Ward to
look after on a geographic basis. They are the points of contact for residents and
ratepayers on their issues and are directly accountable for resolution. These DOs
would report to their bureaucratic superior and also to the Ward Councillor.
This initiative would have many other benefits and importantly will help to flatten
the bureaucratic structure of the Council.
District Officers would be:
- the “interface” between the citizens’ problems and the bureaucracy. They could be
located at the Port Melbourne Town Hall to serve Sandridge, at South Melbourne Town
Hall for Emerald Hill and Albert Park, and at St Kilda Town Hall for Catani, Carlisle
and Point Ormond.
- required to be pro-active, that is not just “sit around” and respond to calls; but
actively “patrol” their district with a view to predicting possible problems and
ensuring they do not become actual problems and
- available to assist elected Councillors to balance the requirements of representation
and governance.
Community Satisfaction Survey
Our commitment to significant improvement will be measured by a newly instigated
Community Satisfaction Survey, which will replace ad hoc surveys currently in place
and provide a measure of performance over time.
unChain Port Phillip commits to achieve:
- 80% community satisfaction with the value ratepayers receive for their rates, up
from the current 62%.
- 80% satisfaction with council’s engagement of the community in decision making on
key local issues, up from the current 50%.
The ratepayers and residents of Port Phillip need a new direction in the financial
management of the municipality. unChain Port Phillip will provide it.
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