Tag Archives: Professor Joseph Drew

269 – Unrestricted cash: are councils hopeless or helpless (or both)?

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630 words (7 minutes reading time) by Lancing Farrell

Professor Joseph Drew has posted another of his valuable and prescient videos for local government leaders. His analysis of the financial sustainability of councils in NSW heralds a warning across Australia for councils experiencing rapid increases in expenditure that are not being matched by revenue increases – especially those subject to a rate capping regime. NSW councils are running out of cash to fund operations. The FinPro/Municipal Association of Victoria report in 2022 showed that all Victorian councils except those in metropolitan areas are experiencing underlying deficits and the problem is getting worse.

Professor Drew’s warnings should really be a headline on the agenda papers for every council meeting!

I think part of the challenge for councils in acting on his warnings and advice is the prevalent sense that there is nothing that can be done – councils are at the mercy of forces greater than any they could hope to overcome. In discussions with Professor Drew I have likened it to a movie where a meteorite is expected to hit Earth and no one thinks it can be stopped or deflected.  Half the population are resigned to their fate and having a party, and the other half are sitting in the dark with their fingers crossed hoping it will miss.

Maybe a better explanation is that hopelessness is the feeling that nothing can be done by anyone to make the situation better. People may accept that a threat is real, but that threat looms so large that they feel the situation is hopeless. Helplessness is the feeling that they have no power to improve the situation. I think councils have a strong sense of both.

Well, for those with greater confidence that something can be done (and should be done to protect community interests), here is a list based on the initial advice Professor Drew provides (he is prepared to offer more detailed and specific advice to councils that ask):

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268 – Local government history – repeating, rhyming or informing?

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900 words (10 minutes reading time) by Colin Weatherby

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I believe that it is important to understand how we have gotten to where we are today if we are proposing to make changes, simply so that we can benefit from past learnings and avoid repeating mistakes at the expense of the community. I like to see evidence backing a proposal that commits significant community resources to doing something.  Call me old fashioned (and people sometimes do) but I figure it is what a careful professional does.

Having always worked with public infrastructure, I know decisions made today have ramifications for another 50 to 100 years. No one builds a road or plants a tree thinking only about the next 5 years. I have cursed short cuts made decades ago by my predecessors when I have been required to sort out difficult problems. My approach is typically characterised by colleagues as time wasting in their haste to get on with trying out the latest management fad and, potentially, just doing wrong things righter.

This post is an attempt to unpick what has happened in Victorian local government to get us to where we are, and understand what it means for what councils should do next. My concern is that councils faced with the failure of existing approaches, as evidenced by the imposition of the rate cap (effectively a taxpayer revolt!), will then double down in doing the things that leaders know how to do. If it is not history repeating, it will at least be rhyming as Mark Twain observed. Better still, it is neither and it becomes informing.

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267 – Professor Joseph Drew – Analysis of Financial Results

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880 words (10 minutes reading time) by Lancing Farrell

The mean and median of the data set for all NSW councils

Professor Joseph Drew has posted another enlightening video on his YouTube channel. His analysis of 15 years of council data in NSW shows worrying increases in expenditure on staff, materials and depreciation. In fact, ‘worrying’ is an understatement. The situation is becoming catastrophic. Yet, no one seems overly worried in the Premier State.

Professor Drew has committed to producing the same data for Victoria. Maybe there will be more of a response from the Garden State. As every gardener knows, you have to observe what is happening and make timely interventions for a garden to succeed.

One of the challenges Professor Drew’s video has highlighted for me is the relatively low level of executive financial literacy and knowledge of statistics and data. This might explain the lack of response to the data from local government. Professor Drew goes to great lengths to explain the importance of measures of central tendency and the difference between the available measures. In particular, he is looking at the mean and standard deviations of the data set, and the median .

Are you digging out an old text book or searching on Google yet?

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262 – The other side of the ledger: A cautionary tale for growing councils

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1200 words (13 minutes reading time) by Colin Weatherby

A research article in the Australian Journal of Public Administration, titled ‘The other side of the local government ledger — The association between revenue growth and population growth,’ raises a crucial red flag for all councils currently grappling with population growth. The study, by Professor Joseph Drew and his colleagues, sheds light on the relationship between population growth and local government revenue. Professor Drew has made a video explaining the findings of the paper.

In local government, you hear a lot of talk about the rate cap, a limitation on property taxation imposed by the State government on councils, and the impact it is having on councils’ ability to fund services. I have posted previously on what I think councils should be doing in response to the spending gap arising from the rate cap. Most discussion in the sector has focused on the impact on expenditure.

Professor Joseph Drew and his colleagues are suggesting it is equally important, perhaps more important, to understand the impact on unit revenue. Unit revenue, representing the per capita revenue generated by a council, becomes pivotal when service demand stems from individuals residing in the municipality rather than the properties they occupy. The potential mismatch between service consumption drivers and revenue generators poses a substantial financial sustainability risk.

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