Mayor Williams has presented the Redlands with a cheesy budget full of holes. It pretends to meet her un-costed and irresponsible election promises by suggesting that we use different goal posts. But the reality is that rates are rising well above inflation.
The Budget, approved by a Council majority on Thursday, puts off the hard decisions and makes unrealistic assumptions about future spending. It does not provide Redland City with a sensible and sustainable long term financial plan. Redlands citizens are being misled about the City’s true financial situation.
$11.2 million operating deficit
Council is budgeting for an operating deficit of $11.2 million in 2014/15 because Mayor Williams is incapable of balancing the City’s outgoings with sustainable revenue. We are not paying our way. She was quoted in the Bayside Bulletin as saying that she wanted the community’s view on how ratepayers wanted the council to reduce its forecast $11.2 million deficit with options including reducing services, cutting staff or increasing rates. The community voted her into office in 2012 to do the job, not start a conversation.
Rates increase more than inflation as measured by CPI
The Mayor’s budget will increase general rates by 5.99% which is exactly double the inflation rate. Pensioners face an even higher effective increase because their rebate has not been adjusted in line with inflation.
Rates and service charges combined are forecast to increase by 3.5%. This is well above the latest CPI increase of 2.9% and way above Council’s forecast of 2.2% CPI over the budget period.
In a weird attempt to convince voters that she is keeping her promise to keep rate increases in line with CPI, the Mayor cooked up her own, higher, “CPI” figure, the “Redlands Blended CPI”, and suggested this be used instead of the generally accepted Australian Bureau of Statistics figure. What made her think that she could get away with such a silly deception? What kind of “CPI” will she propose next year that just happens to equal the rate rises then?
Over-charging for water
Following questioning by Cr Boglary, and an investigation by the Queensland Competition Authority, Council has belatedly acknowledged that $15 million of overcharging for water during 2013/14 and 2014/15 needs to be put in a reserve account to ensure that funds will be available when required to “smooth” water prices in future years. The Mayor will not explain exactly how this will work until Council’s financial report for 2013/14 is released in October. This should have been fully detailed in this Budget (and in last year’s Budget) to provide full transparency.
Forecasts for later years
Council’s forecasts for the years after 2014/15 and all of the derived financial indicators are based on totally unrealistic assumptions about future costs. Cr Ogilvie points out that Council assumes the City’s total staff costs will remain constant for the next ten years while the City’s population (and service requirements) steadily increase.
Council’s forecasts also assume significant “efficiency target” savings on materials and services starting with about $10 million (10%) in 2015/16. Because about 65% of costs are are incurred by the water and waste water business unit, with little if any scope for discretionary cuts, the balance of Council’s spend on materials and services would have to be cut by about 30% to achieve the targeted savings.
If such large cost savings could be achieved, then a plan should already be in place to do this. Council has produced no documented business strategy underpinning its cost reduction plans for future years. Business owners in the Redlands will know that wishful thinking is not a good recipe for business success. Company directors will know that they could not get away with publication of such unfounded and misleading financial forecasts.
If these aspirational cost savings are removed from the City’s financial forecasts, debt increases $25 million by the fifth year. Alternatively, there would need to be additional rate increases of about 2.5% per year. This would result in combined rates and charges rising at twice the CPI (the real CPI) between 2015/16 and 2018/19.
We need to shine a light on this
Redland City’s budget should be the subject of independent review to determine if ratepayers, creditors and lenders are being properly informed about the City’s true financial position.
The Council meeting to discuss the budget was especially notable for the Mayor’s determination to stifle debate about the City’s financial outlook. Councillors were told that they could speak for only 5 minutes. Such inadequate public discussion of the City’s finances should prompt residents and ratepayers to wonder what the Mayor is trying to hide.
Even more alarmingly, Councillor responsible for finance Mark Edwards suggested at the Budget meeting that in future, the only councillors allowed to participate in detailed budget discussions should be those Councillors who vote for the budget. You need to read this twice to comprehend the stupidity of his proposition. That’s right; a Councillor would have to “sign up” to vote for the budget before being allowed to participate in the detailed briefings and discussions about the City’s financial situation. This would enable Mayor Williams and her unthinking supporters to cook up a special pre-election budget next year without any tough questions being asked.
Help us do some case studies
Redlands 2030 will be doing more detailed analysis of the City Budget and financial forecasts. We would like to do some case studies of specific categories of rate payers to find out what the real increase in Council rates and charges has been over the past few years. If you would like to help us send an email to: