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Manningham Council receives some push-back.

Some people are standing up to the heavy-handed and deceptive tactics of Manningham City Council.

As you may be aware, Manningham Council runs special charge schemes for several shopping areas. Basically, the council collects money from businesses in the shopping center and say the money will be used to market and promote the local businesses. They explain their objective as follows:

"To support marketing and business development initiatives in the Center" (page 3849. Minutes 24 November 2015.)

"The encouragement of commerce, retail and professional activity and employment..." (page 3850).

In this particular case the 'Center' is the Templestowe Village Shopping Center.

This sounds very reasonable. The council brings the shop owners together to help them market and promote their own businesses. The council collects money from the businesses to employ a marketing expert and fund promotional activities.

But what you think, or hope, is going to happen and what actually happens are two very different things.

 

COUNCILS OBJECTIVES FOR THE 'SPECIAL CHARGE' SCHEME.

Please see point 2.4 on page 3851 in the minutes for 24 November 2015. The first key driver behind the council's decision to declare this special charge for Templestowe Village was based on the success of the prior special charge scheme which just ended. That scheme's success was stated as follows:

  1. 'Primarily to support capital works improvements in the Center ... and also included a component for marketing and promotion'

The 'capital works' the council refers to here are footpaths, seating, signage, repairs and so on. Many would say these expenses should normally be met by the council. There is also a 'component' for marketing and promotion. But note what the money is being primarily spent on – things many would say the council should fund.

On the next page, Manningham council is even more direct. If this special charge scheme is discontinued they say:

  1. "There would be an increased pressure for Council to spend other rate revenue to support the economic viability of the Center and it's role as a community hub." (page 3852 minutes 24 November 2015)

So without the special charge scheme, Manningham council would need to dig deeper into their own money to do the same things.

 

Many may argue that since businesses would benefit from this capital spending, they should pay some or all of the cost.

But that is not really the whole story. The notion that the shopping center needs to be an 'economically viable area' and a 'community hub' are first and foremost Council objectives - imposed on Manningham Council by the state government.

Being 'economically viable' and a 'community hub' might indirectly promote business in the area but that is not the council's real motivation. The real reason behind developing 'viable community hubs' and 'activity centers' is so these activity centers will both justify and attract high density housing developments around them.

I go into this very issue and provide evidence and quotations in other articles on this website. (See Manningham Council's Special Tax.) But for now, when the council talks about 'vibrant places where people can meet' (4.2, 5.3 page 3853) they are talking about places that will provide support for high density developments that surround these places. You cannot built apartments and town houses and not provide places for people to meet and be entertained.

I agree that there would likely be benefits, one day, for businesses. More people living there will mean more trade. But I think that most businesses are under the impression that the money they give the council under this scheme will yield results for them in the coming months and not for whoever owns the shop in 5, 10 or 15 years time.

 

THE SUDDEN REBELLION BY THE SHOP OWNERS.

The rebellion by the businesses at Templestowe Village came as a surprise to the council. Manningham council thought they have everything stitched up. But it then blew up. Why was that?

The answer is obvious to most experienced business people. The problems were:

a) Consultation was seen as insincere.

b) Complaint handling was an exercise in not listening.

c) The counting of support for the scheme was very misleading.

d) The scheme does not ensure good management.

e) The council cannot talk to normal people.

 

Let us go into these issues one at a time.

 

A) CONSULTATION WAS SEEN AS INSINCERE.

If you are going to try to help someone, that is, organize people, get them to commit to a scheme, spend  their money, and so on, then your initial meeting is absolutely important. That meeting is where sensible, practical, pragmatic leaders of organisations sit down and discuss how one can provide a benefit to the other, what can be done, how success can be measured and so on. This is the way business partnerships typically start.

If this initial meeting does not go well and there is little conviction or buy-in, then the whole scheme is on very shaky ground.

So what does Manningham council do?

They outsourced this step! That is right. They organised for consultants to go and talk to the business owners and come back with signed forms of agreement to the scheme! (2.4.3 page 3851).

So the most important step of any business partnership was outsourced! And it appears the consultants were required to come back with signatures on forms.

From where I sit, Manningham Council is completely disconnected with the business world and has little business sense and experience.

 

B) COMPLAINT HANDLING WAS AN EXERCISE IN NOT LISTENING.

Manningham council received 10 letters of support for the scheme and 17 letters from businesses that objected to the special charge scheme.

If you read through the council document that details how these objections were handled, you will see that every single objection was dismissed.

Often, the council dismissed objections by using the argument that they thought the special charge scheme provided some special benefit to the business.

Note the 'some special benefit'. Sometimes this was taken to absurd lengths.

For instance, the only benefit the council could point to for one objection was an entry on a website. This website had been funded by the special charge scheme and was a disappointing and very poorly executed IT project that had almost no buy-in from the businesses. It was so badly done that it appears, to me at least, that the few lines of text promoting each shop had actually been written by the website developers themselves. After 5 years and $250,000 this was what the council pointed to as a special benefit.

Overall, not one complaint carried any weight with the council. All were brushed aside.

There was almost no understanding by the council of the financial pressures on businesses. The council seemed to hold an opinion that if you are in business then you just pay your expenses. And the special charge scheme, ballooning body corporate fees, council rates and so on, are to Manningham Council, just expenses that businesses have to pay. To me, this view seems to be more commonly held by government bureaucrats who spend public money rather than by business people who have to earn the money before they can spend it.

In the end, not one of the arguments based on the increasing costs of doing business had any real impact on the council's deliberations. All were brushed aside.

The council was focused single-mindedly on renewing the special charge scheme. One reason for this, I think, can be found in 4.3 page 3853 of the minutes for 24 November 2015.

"In addition, a strategic indicator in the Council Plan is participation in special rate and charge scheme and the measure is “Number of activity centers participating in a Special Rate and Charge Scheme for marketing and promotion.”

In short the state government measures the council's performance, in part, by the number of these special charge schemes they have in place. I think this may be why the council was so determined to push the special charges through and why it was so quick to brush aside all objections.

 

C) THE COUNTING OF SUPPORT FOR THE SCHEME WAS VERY MISLEADING.

This is where the council came unstuck.

Basically if a business did not submit an objection to the council, the business was assumed to support the special charge scheme.

This assumption for Templestowe Village was definitely a false assumption. When one shop objected formally through VCAT, it started an avalanche.

First one shop objected and was joined by 14 other businesses (1.7 page 3850) then the total came to 37 businesses objecting with a further 11 objections being lodged (page 3849). Then a further 22 businesses sought to object (1.10 page 3851)

Soon the council had open rebellion on their hands and they wondered why.

I think the council may have known that assuming silence meant agreement was deeply flawed. When this case was to come before VCAT, I think they knew this assumption would not stand up to scrutiny. VCAT would ask some very serious questions and would not permit the council to assume silence meant agreement.

So what did the council do when they have to review the support for their scheme before the case came before VCAT? They switched tack entirely.

Please see 10.3 pages 3855 and 3856.

"Any owner or occupier who chooses not to make any submission to council would be considered ... to support the proposed discontinuance of the special charge scheme".

I think the council knew that a much more defensible position was to assume that silence did not imply support.

 

D) THE SCHEME DOES NOT ENSURE GOOD MANAGEMENT.

Please see 6. page 3854 where it describes how the special charge scheme works.

6.1 The traders association 'requests' the special charge scheme be renewed. (There was something deeply flawed about these 'requests'.)

6.2 Property owners are legally liable to pay the charge to the council.

6.4 The traders association must enter into a 'funding agreement' with the council before the council gives 'the funds' (that is the traders own money) back to the traders association.

There is one important condition of this agreement between the traders association and the council.

It is this: The council has the final say in the spending of the traders own money. This is suggested in section 1.2.4 page 3850 and sections 6.3, 6.4, 7.3 on page 3854. But please especially see section 2.1.6 on page 5903 of the minutes of 17 Dec 2013, where the council renewed the Tunstall Square Special Charge scheme and said:

"The Tunstall Square Traders’ Association will manage the funds raised via an elected committee of traders and/or property owners. The funds will be managed in accordance with the binding funding agreement between the Traders’ Association and Council. Council will release the funds to the Traders’ Association upon receipt of quarterly financial statements, budget forecasts and marketing plans." .)

(I think the conditions of the Tunstall Square and Templestowe Village special schemes would be very similar.)

This strikes me as being a bit heavy handed. The council essentially has the right to veto the spending of the traders own money by agreeing to or not agreeing to the trader's marketing plan.

The council justifies this position by saying they want to enforce a 'high level of financial and management accountability' on the use of the funds.

This sounds reasonable but it does not work. Please let me tell you why.

Usually the most vocal people get their way in meetings ( I often hear that this is the case in many body corporate meetings). To stop money being spent on the needs of the most vocal, careful discretion, good people management and good listening skills are needed.

Clearly the web site project for Templestowe Village demonstrated that both the traders association and the council are very weak in this area. The majority of businesses clearly did not buy in to the project and it ended up being a big disappointment. In the end, those who supported the web site project, blamed those who complained about it, saying they did not provide the information required of them. Clearly the project was very poorly defined and poorly formed. In the end these shortcomings led to a poorly executed and poorly managed project. The council did not pick up on the early warning signs but instead rubber stamped the expenditure for the web site.

The veto rights of the council presuppose that the council will know what is best to spend the money on and what is frivolous expenditure. It would appear the council, along with the traders association, do not have the people management, listening skills or discretion to do this.

 

E) THE COUNCIL CANNOT TALK TO NORMAL PEOPLE.

In the business world, when a business relationship starts to show cracks, what do you do? In the company I work for, we have a major client. When there are problems in the business relationship, our account manager is told to go and see the right people and sort the problems out. I do not think he has failed to date to sort out any problems.

What does Manningham council do?

First they don't meet with people to listen to them. They meet with people to get their way. They focus on what is their right to demand from others under the law. Also they focus on achieving their own objectives and performance measures - even if this is at other peoples' financial cost, stress or frustration.

A good example of their inability to talk to and work with normal people is their outsourcing of the most important business meeting - where business relationships are established - to consultants.

None of this is a good way to start a business relationship.

Also with Manningham Council, when problems develop in the relationship, they end up in court.

Good business people will try to sort things out before they go to court. Court cases are often regarded as an expensive, time consuming distraction that don't always go as you would like.

And look at how Manningham Council goes to court. Manningham council says that to make their case in court they need the services of: a legal professional, an independent valuer and a retail economist (2.2 page 3851).

How on earth is it possible, when someone is trying to help someone else that it ends up in court as a big, expensive fight? I think I can say that no business would allow such a silly thing to happen.

Why couldn't the issues have been sorted out earlier by simple discussion, negotiation and compromise?

These problems could have come about because the business relationship did not start of the right way.

Why on earth doesn't the council get rid of those consultants, invite the business people to the council offices, ( possibly give them a meal ) and then discuss the problems and sort things out – sincerely, honestly, genuinely and not with hidden agendas and hidden motives.

Mixed motives, hidden agendas and deception typically end up poisoning any business relationship.

 

In summary, my view is that the council does not really want to help local business. That is not their real objective. Manningham councils say they want to, but when you look at what they actually say and do, clearly it is not the case.

I think what is closer to the truth, is that council is actually taking money from businesses under the pretext of helping them, while in reality is it predominantly using that money to further it's own agenda and objectives. It is really using the traders money to develop the shopping center into the activity centers they want. That is something that probably should be funded by council. There is a component of business promotion but it is largely ineffective and very poorly executed.

In short the special charge program is actually an additional tax that businesses pay to the council. And I think people are starting to see this.

 

ONE FINAL POINT.

The council says it does not want to force special charge schemes on shopping centers that do not want them (2.9 page 3852).

Is that really how things work at Manningham Council?

When Manningham council first saw they had a rebellion on their hands, they were ready to go to court with their legal representatives, their retail economist and independent valuer. In short, they were ready to show up with their big guns to ensure they could do as they wanted (see point 2.2 page 3851).

When the scale of the rebellion became clear, Manningham Council considered it prudent to reassess the actual level of support before committing to further expenses (2.7 page 3852). Manningham Council's legal team said it also would be 'appropriate' (see 2.5 page 3852) - here 'appropriate' alludes to the fact that it would be illegal for Manningham Council to proceed without support from the majority of businesses.

This, apparently, is how business relationships are fostered and developed by Manningham Council.

 

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