General News
2 November, 2022
Time for a re-set
By Cr Gavan HoltTHERE is nothing glamorous about being a councillor and governing at a municipal level. Councillors operate within a very limited sphere of influence due to the regulatory regime placed upon them. The Councillor’s role is threefold...
By Cr Gavan Holt
THERE is nothing glamorous about being a councillor and governing at a municipal level.
Councillors operate within a very limited sphere of influence due to the regulatory regime placed upon them.
The Councillor’s role is threefold. First, set the policies, plans and strategies of the Council. If you visit the Loddon Shire Council’s website you will see 114 of them.
Second, with the executive management team, establish the culture of the organisation, especially fostering a collegial environment.
Third, ensure sound financial management, which is primarily about the annual budget.
Bob Hawke used to say: “Get the policies right and the politics will look after itself.”
It is the third of these roles that I will focus on in this article.
There is a limited financial pie to be carved up, unless you are the Federal Government and own a money printing press, today fancifully termed quantitative easing.
At Loddon there are scores of services to be delivered, 4500km of roads to maintain, numerous towns requiring duplicated infrastructure and complex statutory laws to be administered.
The Social and Economic Index for Areas measures the relative social and economic disadvantage/advantage of areas. Loddon Shire registers in the poorest 10 per cent of municipalities in Victoria.
We are a relatively poor community. This results in a low rate base for the Shire and a rate income of around $10 million annually with which to service the expectations of our residents. This is around one third of our income.
The rest we have to find externally, primarily from the State and Federal governments.
We have always been financially prudent at Loddon, which has stood our community in good stead.
We have always delivered balanced budgets which have usually delivered small surpluses that are carried forward for use the following year. We have zero debt.
This is not the case with other governments in Australia, and this could be a pending problem for us.
The Federal Government has a gross debt of $940 billion and rising, which is around 44 per cent of Australia’s Gross Domestic Product.
Gough Whitlam’s government was considered a poor financial manager and was thus routed in the 1975 Fraser landslide election victory. Admittedly it was unfortunate to encounter the 1973 Arab oil embargo that triggered a 200 per cent increase in oil process and inflation in Australia topping 13 per cent. Its debt was only 20 per cent of GDP. How times change.
The Victorian Government is carrying the largest debt of all Australian states of around $100 billion and rising, with an annual budget revenue of $80 billion.
As interest rates rise these governments are going to have large and growing debt servicing costs. As inflation races ahead of the target range of two to three per cent, in addition to tighter monetary policy, the Federal Government is also going to have to reign in its spending to counter it.
Prices had started rising before the Russians invaded Ukraine and put upward pressure on global fuel prices and caused further cost/push inflation.
The huge amount of government-printed and borrowed money flooding through the economy is a major cause of the problem.
Despite these financial issues, there is bipartisan support, due to changed geopolitical circumstances, for a large increase in our defence spending.
Meanwhile, we have a National Disability Insurance Scheme, which while doing great things for many people, is out of control and rising in cost by an unsustainable 12 per cent a year.
We also have problems with our hospitals and aged care services. We have the proposal to give child care subsidies to households with incomes above $500,000 per annum.
That’s more than middle class welfare, that’s rich class welfare.
Seventeen of the 20 wealthiest electorates federally are held by the current government.
Then there is the cost and the madness that is the net zero carbon emissions target. Energy policy needs to be based on reality, not wishful thinking.
A paper titled The “Energy Transition” Delusion: A Reality Reset, by the Manhattan Institute’s Mark Mills is a must read.
Despite the trillions of dollars spent globally on renewables, the world’s reliance on hydrocarbons has hardly shifted. Just put a tax on the flatulence of our sheep and cows and that will fix global warming, won’t it(?).
We are being saved in this country by our miners and our farmers who enable us to buy the overseas products we want: cars, furniture, televisions, clothes, wind turbines, solar panels and devices etc.
Be patient, I am getting to why all of this is important to Loddon Shire.
Basically it is because of our reliance on these governments for a majority of our income.
We have been assured that the indexed Federal Financial Assistance grants and the Federal Roads to Recovery program are to be continued and we rely heavily on them. That could change quickly.
The Federal Community Roads and Infrastructure fund is to be discontinued. State Government funding for special projects is almost certainly going to be more difficult to obtain.
Then there are the challenges on the cost side. First, from around 2008 onwards, the global financial crisis delivered the so called ‘Rudd money’ which with additional money from other sources, has enabled us to embark on a significant community infrastructure build.
Think halls, community centres and sports facilities. As these facilities age they are going to require significant maintenance.
Second, the 2011 flood disaster saw us receive millions of dollars to repair our roads and get them into an excellent condition.
As these roads age and deteriorate they are going to take millions of dollars to maintain to that standard. Meanwhile, our operating costs are rising faster than our operating income.
We need to start a conversation with our community about how we tackle our pending problems.
What are our most important services? Are there services that can be reduced or eliminated? Try making a list of the things that the shire delivers you think are essential and others you think could be modified.
Do you think the council should go into debt to finance its community infrastructure construction?
If ratecapping was removed we could raise the rates charged, but I don’t think the community would accept that. Could we try co-contributions from the community for roads and footpaths? Probably unacceptable.
Could we charge more for our health and building compliance services and planning permits which all operate at a loss? We are told they are too expensive now.
We subsidise our libraries and senior citizens centres, but they are valued services.
Our swimming pools are money munchers, subsidised by the ratepayer by about $20 per visit. They are also 60 years old and would cost millions of dollars to replace.
We charge our waste and recycling services at cost recovery level. Could that change?
Our community grants scheme is popular and costly. We recognise the social, physical and mental benefits of sport and significantly support these facilities. Then we have the challenges of the new funding model for home care services.
We have an ageing workforce with many of our staff approaching retirement and soon to be replaced.
We have the challenge of attracting and retaining skilled workers, which is becoming increasingly difficult in a tight labour market.
Everyone is competing for a relatively small pool of workers. Our staffing problems are exacerbated by a shortage of quality housing stock in our communities. Should council get involved in this space? There is obviously a cost.
For 27 years Loddon Shire has adapted to circumstances and continued to improve our communities and maintain our services.
Often when difficult decisions are made you have to choose the least worst option. That time may be approaching.
Opinions expressed here are mine and not those of Loddon Shire Council.
* Cr Holt is Loddon Shire’s Wedderburn Ward representative