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Games Councils Play

The Victoria Auditor General's Office (VAGO) audited Manningham Council's Financial Report and Performance Statement for 2014/15. The results can be seen in the minutes for 8 Sept 2015.

The VAGO mentioned in their audit that one of the things they did was compare the figures in the budget with the actual figures calculated at the end of the financial year. That is, the VAGO compared what Manningham Council said they were going to do with what they actually did.

I thought that was a good idea and thought I should do some similar comparisons myself.

 

But first I was interested in what the VAGO had to say about the rates we pay.

The VAGO in their audit report tells us that the calculation of rates is open to fraud and error and open to 'significant judgments' (that is the council is able to make a lot of discretionary decisions regarding the amount of rates they collect.)

Please see the note for item 4 in the table in section 4.1 on page 9 of the minutes for 8 September 2015 where it says that 'Revenue Recognition', that is our rates, is ticked in the table as being open to fraud, open to error and open to 'significant judgments'.

In fact the calculation of our rates is the only item in the table in section 4.1 on page 9 that is ticked as being open to all forms of risk.

 

So what did the VAGO say about the amount of rates Manningham collects?

Please see page 11 of the minutes where the VAGO says it:

"Reviewed the procedures and supporting documentation underlying the establishment and notification of the rates budget"

(That is,  the VAGO went through how the council calculates the rates we pay, and saw the the massive increases in annual rates, but did not see anything worth mentioning.)

also

"Reviewed management controls for the monitoring of actual rates revenue to budget"

(That is, the VAGO reviewed the whole rate calculation process with it's checks and balances and did not see any issues worth mentioning.)

The VAGO say the way the council calculates and manages the collection of rates is satisfactory.

Really?

 

But what were the objectives of the VAGO when it came to our rates?

In particular note the second VAGO quotation above.

That is a very carefully worded statement. Let's look at it in detail.

The council plans to collect rates during the year. They receive money from us during the year. However, the VAGO did not audit the amount of money collected compared to budget BUT SIMPLY AUDITED THE MANAGEMENT CONTROLS of this process.

What I think this means is that the VAGO is not concerned about how much money the council collects from us but instead is concerned that what is collected, is treated properly, i.e. it is banked properly.

In summary it seems that the VAGO leaves it up to the council as to how much rates they want to collect. However the VAGO is careful to ensure that all financial transactions are handled properly and no money goes missing.

So the VAGO is not going to voice any judgement about the massive increase in council rates we experience each year. Instead they restrict their audit to a very narrow area of interest.

So it seems we are on our own here. 

So we need to ask our own hard questions and look into areas that the VAGO may not be that interested in.

 

So let us compare the 2014/2015 Budget and 2014/2015 Annual report.

The budget tells us what the council plans to do at the start of the year while the annual report tells us what the council actually did during the year.

Lets have a look at what the 2014/2015 Budget had to say about our rates.

"The average household in Manningham will see their combined rates and waste charges bill increase by less than $1.30 per week or an equivalent of 3.8%." (page 3, 2014/15 Budget).

"It is proposed that Council rates increase by 4.5% for an average residential property in the 2014/15 year, raising total rates of $75.04 million which includes $0.36 million in supplementary rates. When combined with the proposed waste charges (nil increase for 2014/15), the total rates and charges bill for an average residential property is forecast to increase by 3.8%." (page 4, 2014/15 Budget).

In essence, the residential rates for 2014/15 were planned to increase by 4.5% but because the waste disposal charges remain unchanged, the overall effect was going to be 3.8% for a residential property.

 

What does the Annual Report for 2014/2015 tell us?

Please turn to page 36 of the minutes for 8 Sept 2015.

The figures shown below are 'actual' figures not 'budget' figures. That is, the figures below are not what was planned to occur but what actually did occur.

We are told from the budget document that our rates were to go up by 4.5%. So what actually happened? What were the final figures for 2014/2015 compared to the previous year?

 

Charge

Actual 2013/2014

(Previous Year)

Actual 2014/2015

 

% Increase

General Rates

$70,879,000

$74,584,000

5.23%

Supplementary Rates

$308,000

$486,000

57.79%

Recreational Land Rates

$69,000

$72,000

4.35%

- Total Rates

$71,256,000

$75,142,000

5.45%

Waste Charges

$12,070,000

$12,149,000

0.65%

- Total Rates and Charges

$87,291,000

$83,326,000

4.76%

 

We were told in the budget that residential rates would go up by 4.5% and if the waste charges are taken into account, the overall rise would be 3.8%. Here we see the rates actually went up by 5.45% and 4.76%.

So what happened?

I know that my rates went up around 3.8%. And I know that the vast majority of ratepayers in Manningham are residential homes. So I am led to think that the vast majority of ratepayers in Manningham also experienced a 3.8% increase overall.

So who paid the rest? If I paid less then someone else must have paid more to get the percentage increases shown above. If residential ratepayers, who make up the majority of those who pay rates, paid less, then who were the unfortunate few who paid more - in fact a lot more?

It would appear that non-residential rate payers paid a disproportionately large amount of rates so that you and I and many others could pay less. Who are these non-residential ratepayers? I assume they are businesses, clubs, developers, car yards, industries and so on. It appears these organisations shouldered a massive rate increase so the vast majority of other ratepayers in Manningham would have lower rates.

People may be tempted to think that keeping rates low for the majority by penalizing a small minority is a good thing. But think of that minority. They are the clubs, businesses, shops, factories, nurseries and developers. These are the organisations that employ people.

I don't know about you, but if I am right about this, then I think the whole thing stinks.

I simply cannot see why the council has to play these kind of games with ratepayers. That is, trying to placate the majority while penalizing a minority and then being very careful not to say anything about it.

I cannot see why the council cannot work to reduce costs.

But Manningham council keep telling us that ratepayers demand more services from the council – that is the ratepayers and interest groups that the council listens to and say the kind of things the council wants to hear.

Other statistics that I have mentioned on this website indicate that a much larger proportion of ratepayers want our council (and other councils) to reduce services, expenses and staffing levels.

That however, is something Manningham council simply does not want to hear and so they don't listen to, or they ignore or avoid or give no credence to such evidence.

And so we see these discriminatory tricks and nonsense our council gets up to as they attempt to walk down both sides of the street at the same time.

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