IT’S a bit of a shock to hear an annual budget described as a ‘delight’ but South Gippsland Shire Council Mayor Cr Warren Raabe was serious, sober and optimistic when he used the term during his support for placing the proposed 2011/12 Council budget and its embracing Long Term Financial Plan 201/12-2020/21 on public exhibition.
Although he said he was not a “numbers man”, Cr Raabe firmly viewed the Annual Budget and rolling Long Term Financial Plan (LTFP) as the central foundations on which Council’s work is based.
Cr Raabe especially commended the ‘front section’ (executive summary) of the budget as something he hoped many people would make the effort to look at, and potentially comment on, one way or the other during the exhibition period.
Council has been slowly working towards a more publically accessible budget process, and has made another step forward this year, starting early with a number of community consultation sessions (including some accessible for non-resident ratepayers) and culminating in what the Mayor called a relatively “layman’s language” budget document.
The budget lists “key projects and initiatives” for each of Council’s Directorates (Community Services, Engineering Services, Development Services and Corporate Services), along with a timetabled outline for a range of areas within each area of responsibility.
The budget’s connection to the Annual Plan is explained and specific examples of works/services/programs are used to clarify the discussion for readers.
After concentrating financial and managerial effort on significant financial recovery and stabilising since 2003/04, Council is now moving into strategic areas that the Mayor anticipated would bring long term benefits, efficiencies and certainties.
In the area of land use/development, Cr Raabe predicted that work on plans for expansion of Leongatha and development of Korumburra town centre will have positive impacts on a wider area than just the two towns specifically.
Among a list of highlights, he looked forward to the extension of Leongatha’s child care centre, the design of a children’s services hub for Korumburra, design of the Great Southern Rail Trail extension from Foster to Yarram and completion of the study of a regional equestrian facility at Stony Creek Racecourse.
Completion of the Port Welshpool Masterplan and the commencement of a Housing and Settlement Strategy to follow up specific investigation areas underlined by the Rural Land Use Plan were also listed as important projects.
Continuing work bringing together community aspirations and Council plans through the integrated community planning process is expected to result in higher satisfaction levels and a greater chance of securing funding from other sources.
Cr Raabe also praised the budget for being responsive to easy-to-meet specific requests such as increased street sweeping in coastal towns during the peak tourism periods.
He was pleased with the budget’s capacity to meet solid financial goals while simultaneously supporting big improvements in areas such as customer service, information technology and staff retention/satisfaction so that those on both sides of the counter experience better than expected outcomes – again to the point of ‘delight’.
Pointing out that costs generally go up rather than down, Cr Raabe observed that the proposed 5.25% rate rise was lower than last year, was in line with LTFP projections and continued a trend of South Gippsland’s rate rises being lower than those of many other large rural Victorian municipalities.
South Gippsland will also operate during 2011/12 in line with ‘budget principles’ including no new borrowings, real savings to be preserved, new service and project initiatives to be justified by a business case.
The key financial indicators – charted green, yellow and red depending on their ‘health’ – and accompanying explanations on pages 18-19 of the LTFP are useful for assessing Council’s overall financial progression over a 10-year period starting with the current financial year.
(These are best viewed online if possible as they are difficult to read in the hardcopy as the charts have been reduced to fit with the orientation of the document.)
The underlying working capital is good though the underlying result is ‘cautionary’ however Council’s Finance Manager Tom Lovass explained that this result is relatively minimal, is more tied to timing of income, and improves gradually in future years.
The ‘self-funding capacity’ and ‘sustainability index’ are also ‘yellow’ for 2011/12 but the borrowing capacity indices are all ‘green’.
“We are stretching the budget a little in 2011/12 by doing more when income is less but it’s within tolerable levels and we are not breaching the integrity of our financial strategies,” Mr. Lovass said.
“We are not compromising Council over the longer period – indeed the long term prognosis is good.”
The 2011/12 budget includes:
- Working Capital of $6.34 million to meet daily cash flow requirements and unexpected short term needs.
- Building of savings via Discretionary Purposes Allocations totaling $610,000 set aside in reserves so they are available for future use. (Includes $203,000 for caravan parks on Council-managed land and $24,000 for Corner Inlet Seawall Drainage).
- Capital works of $13.14 million plus carried-forward works of $1.77 million funded from 2010/11 budget that include Toora Hall upgrade, Corner Inlet lookout, Sandy Point Hall.
Major income estimations include:
- Rate rise 5.25% and waste charge increase 2.5% to raise $29.46 million (up by $1.66 million).
- Operating grants up 8.6% to $0.78million; Capital grants/contributions down almost 49% but still includes expectation of $2.2 million total covering Sandy Point Hall, Roads to Recovery and more. (2011/12 was a substantial year for grants received.)
- User charges up $310,000 as more cost recovery proposed.
Prime expenditure changes include:
- Employee costs up 8% to $19.4 million but consultancies reduced. (EFT staff anticipated to rise from 238 to 251).
- Borrowing costs down almost 50%.
- Depreciation of assets up $421,000
- Utilities and ‘other’ expenses both increased, with majority being $80,000 contribution for library services.
Details of specific works over the next 10 years (with examples ranging from Stony Creek Road works to a new chemical storage shed at Toora pool) are found in the budget’s Appendix D – Capital Works Program, and the list of proposed fees and charges (covering matters from community bus hire to planning permits) can be found in Appendix F.
Cr David Lewis was a vocal speaker and voted against both the budget and the LTFP being exhibited.
Despite the budget being a legal document sent to the Local Government Minister, Cr Lewis was disbelieving about $500,000 identified in savings/efficiencies pulled from line budget analysis.
He railed against the expansion of staff numbers and was especially vehement about employment of staff at ‘head office’ preferring the money to be instead spent on infrastructure works.
However he did not follow through to the logical conclusions such as who would prepare designs, apply for grants, prepare contracts, audit the processes and finances, or help Council plan to reduce risks, comply with government legislation, or even answer the phone without employees at Council’s Leongatha office.
Cr Jim Fawcett concurred that Councillors were right to keep an eye on staff levels and other financial issues but should do so within context of what was also being delivered.
He referred to Cr Lewis’ scare-mongering approach as “mischievous” and insisted “we need more tools to move forward” though admitted he would be “rather less sanguine if more staff were requested next year.”
Cr Jennie Deane and Cr Raabe commented that the staff increases had been well explained by the Chief Executive Officer Tim Tamlin in order to undertake programs desired by the community, with the latter adding that some staff would be on limited-time contracts so would not represent a permanent, ongoing cost.
The community can make submissions on the proposed budget up until Wednesday June 29 and are being positively encouraged to do so as budget decisions have a vital impact on maintenance and improvement of local services and facilities.
Anyone requesting to make a verbal presentation in support of their submission will be heard by Council at a session on Wednesday July 13.
Last year, Toora Railway Reserve Committee of Management representative Kathy Whelan put forward sound arguments which resulted in previously elusive funding and staff time for improvements being nailed down on behalf of the facility.
The success of the discussion-style negotiation that occurred appeared to stimulate Council, as negotiation was then productive for several other submissions made later in the same session.
The cumulative effect of numerous submissions requesting improvements to unsealed roads also resulted in some changes as well as clear explanations of how the road program operates.
From Council’s side, the negotiations during last year’s budget submissions hearing were informally led by Cr Warren Raabe, who is now the Shire Mayor, which is a good sign for submitters to the 2011/12 budget.
The staff now comprising Council’s Executive Leadership Team are also working on their first budget together.
They are professing a ‘can do’ attitude, which is another favourable factor for budget submitters.
Submitters should remember that suggestions with links to Council policies or feasibility studies or multiple beneficiaries are more likely to be successful than those which are parochial or vaguely defined.
Council’s budget is trying to balance many competing demands for tangible and intangible services and for on-ground works/structures across the entire municipality.
Some different places share similar requests – such as sealed roads – but have widely varied numbers of people using the facility.
Even the best of ideas may not get up this time around but could be planted as a seed for 2012/13 onwards when the LTFP foreshadows Council to be in a financial position to recommence expanding expenditure.
It is also worth noting that polite and reasoned submissions tend to receive a better hearing than those that berate.
For inquiries or to request a hard copy of the proposed budget to be posted, contact Council’s reception on 5662 9200.
Otherwise the proposed Budget 2011/12 and Long Term Financial Plan can be viewed at Council’s website.
Council will reconsider its budget – presumably with some revisions resulting from the public submissions – at its meeting on July 27.