Friday, February 29, 2008

How local councils blow money

Lets take a look at Glen Eira City Council and their annual budget.

Why the City of Glen Eira? Well they describe themselves as:

  • "a low-rating and very low cost Council (e.g our budgeted cost of day-to-day services per property for 2006-2007 was 14% below the average of our peers"
And with that simple sweeping statement, the councillors reassure us that there is no need to worry that the money is spent well. Is spending it more efficiently than the other councils a good benchmark to use ?

I doubt it, but clearly its one of the few benchmarks that the council uses. And under their Strategy section of the budget, they openly admit that the sky is the limit when it comes to bigger budgets, bigger spending, more projects:
  • Generate funds to renew and upgrade our ageing assets and community facilities
  • Maintain essential services at not less than current levels
  • Review every council service focussing on continuing improvement
with only one constraint:
  • Keep day-to-day costs and rates below our peers.
Now this sounds all wonderful and dreamy in our social democracy. Yay-more services ! Continuing improvement !

But I contend that the council's strategy is as simple as possible - grow. Find new things to do, new ways to steal money, hire more people and do it slowly and steadily so nobody will scream.

You can see this mentality by the CEO's comments on this page:
If I said to you:
"You can keep your $1,000 — but you provide your own roads, your own footpaths, your own 200,000 item library service, your own senior citizen centres, you immunise our children, you check the safety of swimming pools and the hygiene of food shops, you operate 50 school crossings every morning and afternoon, you light the streets and fund the fire brigade, you take waste to recycling companies or the tip, you tend the parks, you provide maternal and child health for 400 babies a week, you deliver home care to 3,000 people, provide meals on wheels to 400 people, and so on..."

You would say:
"But I could not do any of that for $19 a week!"

And you would be right.

[sarcasm] Gee, we really owe him everything for taking our money and spending it for us, otherwise we would never be able to enjoy the things we like. [/sarcasm]

You've got to be kidding me. Are we supposed to accept his word that somehow council waves its magic wand and creates services and infrastructure that we wouldn't be able to achieve as individuals operating under a free market !?

I would take the $1000 and try my luck with the free market which innovates and succeeds at achieving economies of scale. Because there are 52,585 households, and 57,700 properties in total that pay rates. Averaged out at $1000 per property and whoah - $57.7 million a year ! I'm sure I could build a lot of roads and footpaths, collect the garbage and still have spare change. Once you trim the fat, get rid of street festivals and half the bureaucracy, people can keep a lot more of their money.

I've got to laugh at some of these costs, and how easily to money just flows through their fingers like water:
  • Street tree data collection costs $100k
  • Additional costs for street sweeping: $69k
  • Water conservation measures at Council's nursing homes and pavillions: $100k
  • Caulfield Park pavillion: $4.63m

There is something else very illustrative about the nature of councils as being very expansionist and ever-growing. The report mentions that all council officers were notified of key budget principles upon which the officers were to prepare their budgets, one of which is:
  • New revenue sources to be identified where possible
Steal more money why dontcha ?! Speaking of which, check out the Parking Fees and Fines for all the councils below.

Glen Eira is no innocent, raking in $2.65m, but I've always known Stonnington($15m) and Port Philip($21m) were huge thieves and hate motorists with a vengeance.

The budget analysis shows that Glen Eira council spent $83m in 2006-07 and now plans to spend $89m in 2007-08.

On top of the rates they collect. They receive $14.4m in grants and subsidies. And how do they spend it ?

Well here is the full proof that when you get a central authority to tax and spend money, they establish huge administrative bureaucracies that cost an exorbitant amount to run and hire armies of paper pushers.
  • Annual 2006-07 budget for salaries and wages: $38m
  • Annual 2006-07 budget for salaries and wages: $41m
Glen Eira Council's only saving grace is that it is indeed significantly better than other neighboring councils. But it still receives an extravagant amount of money, hires armies of bureacrats and splurges on frills and unneeded items just so it can grow its budget every year.