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3:07 PM
Some Deception By Manningham Council

Manningham council officers were asked about the large increase in property rates for 2014/15 at the April 29, 2014 meeting of council.

The question was, "Why do our property rates increase at 4.5% while CPI increases at 2.4%, which is half the increase in the property rates?"

Manningham's Chief Executive Officer tried to justify the large increase in rates. Several of the things in his reply were, I think, misleading. I will focus on one misleading statement in this article. In the next two articles I will focus on two other misleading statements in his reply.

Please refer to the minutes and audio recordings for the April 29, 2014 ordinary meeting of council. The CEO's reply to this question is not included in the meeting minutes. Instead it is available in the audio recordings for the meeting. His reply is at agenda item 15.1, around 3:50 into the forth audio recording.

In his reply the CEO said.

'One of those underlying restrictions placed on me is to limit the labour cost of the council to no more than effectively around 2.5%.'


Manningham employee cost increases are going to be limited to around 2.5%.

First, many Manningham residents would probably be pleased to hear this. Council salaries have been increasing above the national average for adult public servants. An employee cost increase of approximately 2.5% would mean that Manningham council is starting to reign in their self-indulgent and wasteful ways.

However I fear that residents are being misled.

I hope to demonstrate that the exact opposite is actually taking place. I also hope to demonstrate that after 2014/15, after Manningham council has has made a slight increase in the number of people they employ, we will see council pay rises return to levels once again above the national average.


Let's delve into this in a bit more detail.

Manningham's CEO did not actually say just when employee costs would be limited to 2.5%. This may seem like splitting hairs, but it is important.

Will it just be for 2014/2015? Or will it be on an ongoing basis? This is simply not clear in the CEO's reply.

Now please consider this chart prepared by the Australian Bureau of Statistics.

Figure 1.

The average pay increased for adult public servants between May 2013 to May 2014 is circled in red. It is 3.1%.

Manningham's CEO says he is going to restrict the pay rises of his staff to less than the national average for adult public servants, but he did not say when this was going to happen.

Now please consider the following chart taken from the 2014/2015 budget. This chart can be seen on page 1294 of the meeting minutes for April 29, 2014 where this budget was presented.

Figure 2.

I have calculated the percentage increase of Total Employee Costs over the prior year and placed these percentage increases at the bottom of the chart.

We can see that staff levels will increase slightly for 2014/15 but after that no further increase in staff numbers is planned. The 'EFT' is 'Equivalent Full Time' staff. EFT takes into account full time, part time and casual workers and accumulates the hours worked into the equivalent number of full time staff hours.

Next we can see that the percentage increase in employee costs for 2014/15 is indeed only 2.6%. But please look at the projections for the years after 2014/15. While Manningham Council reduces employee cost increases for 2014/15 they certainly make up for it in subsequent years.

We can also see that the percentage increases after 2014/2015 are again ABOVE the national average increase for adult public servants calculated by the ABS, as seen in figure 1. So for 2015/16 and beyond, Manningham council plan to give themselves remuneration increases well above the national average.

We need to stop at this point and consider the relationship between employee cost and salaries. Salaries make up the major part of employee costs. Other costs included are superannuation, leave entitlements, work cover, and so on. But the essential point is that the lions share of employee costs is remuneration to staff of one sort or another. So it is quite reasonable to assume that staff remuneration increases at approximately the same rate as employee costs - not exactly the same, but at very nearly the same rate.

Also from Figure 2 we can see why the Manningham CEO was not being clear or precise when employee cost increases would be limited to around 2.5%.

We can see from Figure 2 that it is only going to be for one year. And after this one year, Manningham Council has forecast employee costs to return to above national average increases.


Are employee costs for 2014/2015 really going to be limited to 2.5% ?

Not really. The actual increase in employee costs for 2014/15 is not 2.4% but 3.2%.

On page 1275 of the minutes for April 29, 2014 we see this chart.

Figure 3.

The real increase in employee costs is 3.2% for 2014/15 just like it is for later years. Again, above the national average for adult public servants, and well about the average for those in the private sector.

However, for 2014/15 Manningham council is going to fund 0.5% of the increase from 'externally funded revenue'. So for next year, 0.5% of the increase will not be funded by money from ratepayers.

However, after 2014/15, this 'externally funded revenue' stream apparently dries up and the increase in employee costs, which now include the pay rises for the increased staffing level, is fully funded from money received from ratepayers as can be seen in Figure 2 above.

As you can see, we are simply being misled. The CEO has no intention of limiting employee costs of the council to 'effectively 2.5%'. There is no real reduction in total employee costs. The annual increase in employee costs remain around 3.2% to 3.4%, just as they have in the past and just as they will in the future. The council just happens to come by some money for one year and so they don't bill us for the full amount of the increase for that year. After that money dries up, we are back to their old self-indulgent practices but only with slightly more staff.

The Manningham CEO leads us to think he is championing the cause of the much abused ratepayers. He portrays himself as reigning in council salaries. "... one of those underlying restrictions place on me ..."

This is nonsense. Nothing could be further from the truth.


The problem with meetings.

The problem is that when we ratepayers ask questions about the self-serving and self-indulgent practices of Manningham council, the council officers are well prepared. If they excel at anything, they excel at the game of office politics. They develop a story that sounds appealing, convincing and plausible.

They only problem is that when we start to dig into their facts and figures, we see their message has been carefully worded to deceive and mislead and not tell the whole truth. They are well prepared and so bold that they tell us one thing, while in fact, they have done the exact opposite.


Is this deception a one-off?

In the two following articles I will focus on other parts to the CEO's reply to this same question and I hope to show this is not a one-off.

Manningham council deliberately, systematically and repeatedly deceives and misleads the rate-paying public about council costs and the unreasonably large property rate increases.


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