Tuesday, March 3, 2009

Budget considerations


We've been very busy of late, culminating with an intensive full weekend of planning last weekend. From Friday evening to Sunday afternoon, we ensconced ourselves at the Pines U3A centre to discuss this year's budget.

A central issue was what to do with rates - freeze them or allow a modest increase over last year. We are all mindful of the likely impacts of the Global Economic Crisis (GEC) and are exploring ways to stimulate the local economy and help those who need it most. All of us wish to help those in need with targeted assistance - the challenge we face is how to direct the funds. I and several of my fellow councillors support modest rebates to Health Card holders, whilst other councillors prefer not to use this indicator of need, but distribute financial relief through organisations such as Doncare instead. My position? I would like to provide targeted relief through BOTH channels, i.e. to Health Card holders and additionally, through case-by-case assistance facilitated by organisations such as Doncare.

When considering how much rates may have to increase by, factors that have weighed heavily in my personal deliberations include:
- our rates have increased 78% over the last 10 years on a compounding basis. (suggesting we should minimise rate increases now). This compares with the compounded consumer price index (CPI) increase of only 36% for the same period. In summary, our rates have increased at a rate over twice that of inflation! See footnote A below for data sources.

- the need to have sufficient capital to fund essential asset maintenance - we have an increasing cost associated with maintaining buildings we errected in the late 60's. My strong position on this is that all future capital works being considered by council MUST reflect TOTAL COST OF OWNERSHIP over the life of the asset, or at least 5-10 years out. Whilst Manningham is a leader in good asset management, we have yet to develop this level of "true cost" analysis. Having this information would allow us to make more informed decisions in a time when we have to balance the desire to build new facilities against the need to keep our costs (and hence the rates demand) down. All of this does unfortunately speak, in my mind, against a 0% rate rise.

- the benefit to the local economy of a strong capital works program. Spending on infrastructure is known to have positive flow-on effects across the wider community. To me, this makes a modest rate increase less unpalatable.

So, as you can see, there are many issues to consider and I'm certain that we will not be able to please everyone with our budget. Fortunately, there will be plenty of community consultation before anything is finalised, so look out for the notices and have your say! Be assured however that I will do my best to represent the balanced interests of our community, with an emphasis on financial sustainability and fairness.

All this should make for some interesting debates at the next public council meeting March 31st. As always, let me know what you think. Hope to see you there!

Footnote A: Data sources: Council-supplied data shows rates increased by the following percentages each year since 1999/2000 as follows: 2.5%, 6.7%, 4.5%, 7%, 9%, 8%, 5.5%, 6%, 5.5%, 4.8%; This compares unfavourably against the Consumer Price Index data from www.rba.gov.au which shows CPI year-ending June percentage changes (all groups) of 1.1%, 3.2%, 6.0%, 2.8%, 2.7%, 2.5%, 2.5%, 4.0%, 2.1%, 4.5% for the same periods.