800 words (8 minutes reading time) by Tim Whistler

Whilst Lancing Farrell has penned an interesting , and no doubt useful, piece on reframing, I think it doesn’t go nearly far enough. Councils are going to remain on a downward trajectory to crisis while they fail to make major changes in the way they think and act.

I have a much shorter list of changes that councils could make and should make. If they don’t, I fear that there will be massive financial failure and the sacking of councils and their CEOs, mainly because they are unable to make decisions where there are no winners, followed by the imposition of State control through the appointment of administrators and forced amalgamations.

I haven’t seen a single council come up with a serious response to the challenge of the rate cap. Everyone seems to be waiting for someone to show them how.

Here is my attempt to do that.

1. Reframe the way councils see what they do. Stop talking about ‘roads, rates and rubbish’ or ‘back to basics’ in general terms and become specific. What everyone really means when they use those words is make sure that you look after the community infrastructure that councils must own and care for on behalf of the community that relies on it. It is the crucial service that every council provides and no one else can do it when the council doesn’t. Infrastructure ownership, cleaning, maintenance, repair, renewal and replacement is the biggest and most important service every council provides. It always has been. It is a genuine public good.
2. If owning and providing safe and fit-for-purpose infrastructure is the most crucial service a council provides, allocate the funds it requires first. By that I mean, take the funds needed for capital from rates before allocating funds for operating expenses. It is simple – Capex before Opex. When it is done the other way around, as all councils currently do, the operating expenditure is allocated and what is left forms the capital budget. Usually, it is not enough money, so some assets are not renewed or replaced and new assets are funded from debt. In reality, when debt is taken on this way it is actually being used to cover operating expenses. If capital was allocated first, it would be obvious to everyone.
3. Lastly, when expenditure needs to be reduced, make the reductions where you know you should, not just where you can. And, please don’t call them savings if they are arbitrary reductions made to budgets to match expenditure to income. They are just cuts to budgets. A saving is when the same outcome is achieved for less money. The council ‘savings’ I have seen are the equivalent of needing to buy a Toyota Landcruiser but coming home with a Suzuki Jimny and saying you spent less money and therefore made a saving. It isn’t going to tow your caravan. The cuts being made to council budgets can only result in cuts to services when there is no thought as to how they are going to impact operations. Worse still, I hear that councils are cribbing away at Materials and Services budgets and minor capital works to reduce expenditure, which just means less money for infrastructure.

Some final thoughts

I like the idea of identifying crucial services. Councils are talking about core services, mandated services, legislated services, and the opposite being non-core or discretionary services. It is as though just doing what the State government has told councils to do is enough and everything else can be cut or stopped. In contrast, if it is a crucial service, the community has said they need it, maybe the State has also legislated it, and everyone expects the council to provide it.

Councils like to say they are the closest level of government to the people, therefore they know what the people want better than other levels of government, and therefore they should be listened to about it. I am sure this gets up the nose of State and Federal politicians when councillors say it. Now, councils are saying they will only do the things the State has legislated that they have to do, and they will cut back or stop providing other services that the community want them to provide. When they do this, what they are really saying to the community is ‘we know what you want but we aren’t going to do it’. Then they blame the State government and the rate cap. I really don’t think that goes down well with the community and it just reinforces the State’s view that councils need to be told what to do. Don’t just walk away and leave the community on its own if you are the closest voice to them.

I read somewhere recently that companies go bankrupt in two ways – gradually and then suddenly. I can’t help thinking councils are going the same way.