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The Mandarins' Money Pit in Your Council

Your local Council’s Budgets and Financial Statements are separated by public service mandarins so neither Local Government nor the Auditor-General has responsibility or accountability for supervising Councils overall financial management.

The Victorian Auditor-General’s office (VAGO) charges $60,000 to audit my council’s financial statements each year - and doesn’t look at the budget. So VAGO can see what’s spent - but not whether the expenses correlate with the revenue and outgoings approved by Councillors.

The Local Government Minister and his department get a copy of every budget prepared by every local council in Victoria - but they don’t see the Financial Reports.

The Local Government bureaucrats only see the current actual expenditure against the predicted forward year estimates in the budget every June. By that time it’s too late to go back and un-spend money.

Essentially, the budget goes into one department, and the annual financial reports go into another department so neither department sees the whole financial picture.

So it’s left to residents and ratepayers to try to fill the mandarins’ gap and keep tabs on Council - with absolutely no resources to help us, and Councillors and Council staff using excuses like ‘operational matters’ and ‘confidential’ and closed council meetings to try to hide as much as they can.

Here are a couple of things I found in my local money pit.

Maribyrnong City Council itemised $400,000 of consultants reports against a capital item in 2019/2020 budget. The item is an arts centre and library that has not yet gone to the community for consultation and can’t be built without government funding. The consultants fees were approved as capital spending. The Victoria Auditor-General couldn’t tell me if this was allowed or not, because he doesn’t look at the budget.

Also, the former Mayor publicly announced an intercultural fair last year. The fair was a line item in an officer’s report that was approved by Council several months later. The Report noted that funds would need to be included in the 20/21 budget.

I asked the Auditor-General if it was OK for my Council to publicly announce events that had not yet been approved by Council and not yet funded.

He didn't give me a straight answer on that either.

Of course the problem is governments do this all the time. Announce first, fund later.

So it appears my Council is copying bad habits from state government.

But my Council is going to stop doing this. Because it is fiscally irresponsible. And not in the best interests of residents.

Fortunately the Minister, Adem Somyurek is on record during the debate on the new Local Government Act 2020 saying he trusts Councils to do the right thing.

“We have trust in the councils. We start from a position that we trust the councils to do the right things.”

So I’m sure my Council, and yours, will improve their financial management significantly to ensure they're worthy of the Minister's trust.

Getting the Minister and VAGO to close the money pit might take a little longer.

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