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Councillors Use Financial Principles For Own Gain

While Maribyrnong residents suffer under a Covid-19 State of Emergency and significant financial stresses Council staff are making sure their legal obligations for good financial management only restrict hardship payments for homeowners – not payrises for themselves or Councillors.

One of the overarching principles of the Local Government Act is that “….the ongoing financial viability of the Council is to be ensured.”

This is a phrase often quoted, or referred to by Councillors and staff. It was used extensively during Council meetings and discussions related to the current Budget, when Councillors wanted a 2% rate increase, but eventually settled on a 0% increase.

Councils are so protective of their right to tax homeowners, that even their Hardship Policies stress their responsibility to collect rates. Maribyrnong City Council’s Covid-19 Hardship Policy puts it this way:

In times of crises it is important to remember that Council still requires cashflow to deliver critical services to the community….”

And just in case homeowners don’t understand the priorities of Council, the Hardship Policy comes under the responsibility of the Finance Team not Community Services.

At the August 18 meeting, Council was asked why traders were offered a 50% rebate off their rates but homeowners weren’t offered the same.

Mayor Sarah Carter said “…Council had to make a consideration in line with its particular financial performance, especially during the Covid-19 pandemic.”

Councillor Simon Crawford noted “…..that there is a provision in the new Local Government Act that expressly outlines the discounts a Council may give and Council may not have the legislative flexibility to offer discounts to those in need, by virtue of the provisions in the Act.”

This is misleading. The new Local Government Act does not expressly outline any discounts. Clause 171A in the 1989 Act, which provides for hardship and waivers, is still in force.

And while it is true that the new Act does requires Councils to keep financial viability top of mind, there are two areas where Council consistently and conveniently ignores it: staff costs and Councillor costs.

Wages alone at MCC now account for 51% of rates revenue and the total wages increase more than 3% every year. In the FY21 Budget total wages costs rise by more than 6%.

And wage costs are going to blow out more because new clauses in the Local Government Act allow the CEO to hire as many staff as possible:

Clause 48 (1) says A Chief Executive Officer may, having regard to the workforce plan, appoint as many members of Council staff as are required to enable the functions of the Council under this Act or any other Act to be performed.

So, not only do homeowners get taxed to pay for staff to do work under the Local Government Act, but “any other Act” as well.

And Councillors are about to get a massive payrise thanks to lobbying by the Municipal Association of Victoria.

The new Local Government Act states that Mayors, Deputy Mayors and Councillors are “… entitled to receive from the Council an allowance as a Councillor in accordance with a Determination of the Victorian Independent Remuneration Tribunal.”

VIRT is the tribunal that awarded senior MPs an 11% payrise in September 2019. And a 3% payrise for public servants this year during Covid.

Councillors also never mention the Act's fiscal responsibility principles in relation to their own allowances.

In fact, Mayor Sarah Carter was most indignant when asked at the Council meeting in July why Councillors had not offered to forego the increase in their allowances to save money in the budget.

According to the confirmed minutes of the July 21st meeting…..

The Mayor, Cr Sarah Carter noted Councillors are paid approximately $28,000

annually as part of their Councillor duties. Cr Carter further noted that in normal

circumstances there is a high workload for a Councillor which has increased

during the COVID-19 pandemic. Cr Carter stated that considering the long hours

that Councillors perform their duties it would be unjust for Councillors to take a cut

to this already minimal allowance.

The minutes significantly understate her reaction. Watch the recording, she’s offended by the suggestion.

At the same meeting, the CEO Stephen Wall confirmed that Council staff had not been asked to forego their usual pay rises and bonuses or take a pay cut, to help Council manage its extra financial stresses under Covid.

So it seems that neither staff, nor Directors, nor Councillors feel any responsibility to apply the overarching principles of ensuring financial viability to themselves.

But when homeowners need to apply for financial hardship waivers, Council's legislated financial responsibilities are more important than allowing homeowners to keep some of their own money to provide for themselves and their families with dignity.

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