These are the W’bool City Council responses to my first batch of questions about the use of a corporate credit card by one of its senior managers. That story is here.

Is the WCC aware of the use of a corporate credit card for such expenditure and is this type of expenditure the norm for all WCC managers who use corporate credit cards?

No.

How is this spending justified to ratepayers?

Each authorized holder of a corporate credit card will perform different roles requiring different stakeholders, different working hours and locations, and therefore different costs of doing business.   Some roles may require extensive engagement with business and industry, volunteers, residents, regional engagement and statewide engagement, other roles may not. The use of credit cards as a payment mechanism can be of considerable benefit to the Council, ratepayers and the various individuals and organisations that supply goods and services. The benefits are in the form of efficient procurement and reduced administration costs.

Does Mr McMahon’s manager, Director City Growth Andrew Paton, sign off on Mr McMahon’s monthly credit card expenditure? If Mr Paton does not give this approval, who does?

The line manager of the authorised holder of the corporate credit card provides approval.

Several transactions have been deleted from the statements released because they were deemed irrelevant, ie. they were repaid. Who has repaid these funds and for what reason? How much has been repaid since Mr McMahon received a corporate credit card?

A Corporate Credit Card Policy* exists to ensure relevant internal controls are in place. These apply to all authorised credit card holders.

Does Mr McMahon still have access to a corporate credit card? 

Yes.

* I asked for a copy of this credit card policy and the council’s travel policy. Neither are available to the public.

Carol Altmann – The Terrier

This is a budgetary fairytale based on fact. The numbers are real, the names are not.

Once upon a time, in the town of WooBoo, there was a town leader, Snow White, who was paid more than $310,000 a year to work for the seven dwarfs who had been elected by the people of WooBoo to look after WooBoo and help it prosper.

Exciting things were happening in WooBoo under Snow White’s leadership.

There was a big, money-losing festival for children, there was a maritime museum with few boats but a new $3 million sound-and-light show that promised to lure carloads of tourists, there were parties at the racecourse, new public toilets, new parking meters, pretty roundabouts and still lots of money left over for the WooBoo Council to spend on consultants, credit cards, conferences and staff development.

Most of the seven dwarfs were ecstatic, except for Grumpy. Every council has a Grumpy, and Grumpy was seen as a troublemaker.

“Can we afford all this?” Grumpy would ask. “Does this all add up? Why don’t some of these figures make sense?”

“Of course we can,” said Doc and Happy in unison. Unlike some of the other dwarfs, they had represented the Town of WooBoo for many years and had grown fond of Snow White and her team of highly paid helpers.

Mayor Sneezy was equally as enthusiastic: “WooBoo is aspirational, sophisticated and cosmopolitan and I wish people would stop being so negative!”

The spending went on. Sometimes it was on necessary but boring things, like $5.5 million for a drainage system to avoid parts of WooBoo flooding.

And sometimes it was for sparkly things, and the biggest of all was the $15 million upgrade of the main street of WooBoo, with shiny new pavements, new trees, new lights, drinking fountains, more flowers and planter boxes and a much narrower road with so many pedestrian crossings that WooBoo drivers could no longer take their eyes off the road for a second.

The people of WooBoo were happy to see their tired main street being given the full Ritz treatment, even if they privately wondered what was going to happen to the other town streets with their peeling buildings and broken footpaths.

Don’t worry, they were told, celebrate the rise of wonderful Justice Von Liebig St!

Meanwhile, in the MelBoo office of the chief money watcher, the Victorian Auditor-General, a little red light was flashing.

It had been flashing quietly every year since 2014-15 and it warned a “high risk” situation was developing. This high risk was that the Town of WooBoo did not have enough money of its own to fund its operations, once it removed all the one-off gifts and grants from Grandma and Grandpa Government.

In particular, the Auditor General found WooBoo might have trouble paying to repair and replace things once they wore out, like footpaths and playgrounds and bridges.

The red light blinked, but in the town chambers of WooBoo the party went on until, one day in late 2018, it stopped.

By then, Grandma Government had put her foot down and capped rates so councils could not just keep asking ratepayers for more. Instead, annual rate rises would be capped at between 2% and 2.5%.

By then, the money-losing WooBoo children’s festival had been axed abruptly. By then, it was becoming clear that the carloads of tourists were not going to the maritime museum.

The seven dwarfs had to absorb some hard truths.

One of these was that the WooBoo capital works budget for 2017-18 had blown out by a whopping $6 million from $17.6 million to $24.6 million.

A big part of this was dressing up Justice Von Liebig St, the cost of which had grown from $15 million to around $19 million, including $8 million that would need to come from the citizens of WooBoo.

The big drainage project had also been in trouble, with the first contractor going broke and the final cost still not known until it is all finished.

On top of this, recycling fees had skyrocketed, the cost of keeping a pet had shot up, parking in WooBoo was more expensive, rates would still rise, and there was still not enough money for all the old roads, pavements and playgrounds to be repaired.

Things were suddenly not so good.

Grumpy thumped the table and yelled “I told you so!” and this time Mayor Sneezy agreed with him.

Happy and Doc, being astute in the art of public relations, told the people of WooBoo that they were committed to tackling a crisis that they had “inherited” and the only way to do this was to ask the people what they thought, ignore that, and then seek to bust the rate cap anyway.

The three other dwarfs, who were still trying to get their heads around it all, nodded in agreement.

And so, dear reader, hi-ho, hi-ho, off to the Essential Services Commission we go.

And what of Snow White?

Ah, she sensibly retired early to her castle by the seaside, from where she watches the hard-working people of WooBoo rise up and prepare to march past the empty grounds of the maritime museum, and down the glittering, gridlocked avenue of Justice Von Liebig St, named, as it so happens, for the German industrial chemist who invented fertiliser to replace cow dung.

The End.

[For those who want to go deeper, you can find the Auditor-General’s red light here on the WCC’s adjusted underlying result, page 79. The WCC 2018-19 budget is here. You can find the capital works details at item 4.5.1 on page 45.]

By Adam Kempton

Lawyer, former Liberal MLA for Warrnambool, provocateur, West Highland Terrier

1. Unfair burden: Rates are in essence a regressive tax. That means they affect people with lower incomes greater than high income earners . If you are a pensioner and the rate cost to you increases by one dollar, then the impact on you is greater than the millionaire whose rate increases by one dollar. This means the rate increase imposes a disproportionate tax penalty on low income people.

Does the council want to be a council for the rich?

This, in essence, is stealing from the poor to give to the rich.

2. There has been no increase in pensions or wages for many years, so why should council increase its revenue way ahead of the community?

3. Local council ( and other tiers of govt ) more or less have a guaranteed flow of revenue ( taxes/rates) , unlike other people and sectors of the economy.

4. The new Chief Executive needs to be given a go in finding savings in reforming council so no increase is necessary.

5. The results of the community consultation poll, which strongly opposed the rate increase, were discarded.

6. There is a federal election in May. The council does not know the positive or negative impacts of a change in Federal Government on its rate/revenue position.

7. It will be a massive embarrassment if the Minister or Essential Services Commission – to which the council applies for the increase – rejects your application for the increase.

8. The rate increase sends a bad signal to the community that says the council will always take the soft and easy approach by increasing its revenue, rather than seeking to find efficiencies.

9. Opposing a rate increase signals the council is applying the same principles that the private sector and households impose upon themselves in the same situation.

10. Is there, or has there been, a long-term (say 10 years ) strategy in which this rate increase would fit?

11. What consideration has this proposed rate rise being given in the context of the massive infrastructure proposed spend for this area? And what consideration has been given in the event that infrastructure spend does not occur?

12. What account has been taken of the economic downward pressure on the area through the milk price and cost pressure in the important dairy economy? This has serious effects right through all sectors of the local economy.

The Terrier is taking a closer look at how we went from budget stability to a budget emergency. It is a slog through some pretty dry data, but worth it. Stay tuned for updates.

Carol Altmann – The Terrier

How to save $700,000 in seven days: the final instalment.

Two words: Flagstaff Hill.

I have been writing since 2014 about the steady decline of Flagstaff Hill and the picture never gets any better – it costs ratepayers at least $500,000 a year to sustain.

This year, the deficit will be higher than last year, and is expected to be at least $600,000.

The Warrnambool City Council says it must save around $700,000 a year from its budget, yet Flagstaff Hill is costing it $600,000. Am I missing something?

At least $6 million of ratepayers’ money has been used to prop up the maritime village since it began dying around 10 years ago, but it is not mentioned in any of the council’s material about rate rises and service cuts.

Instead, the WCC pushes out misleading information and media puff pieces about how well it is all going up on “the Hill”.

It isn’t going well and we shouldn’t take that personally: tourists tastes have changed and they changed a long time ago.

What we should take personally is the complete lack of any accountability for the huge amount of taxpayer and ratepayer money that has been thrown into Flagstaff Hill, all on false promises.

In 2017, the Warrnambool City Council sunk another $1 million into a $3 million taxpayer-funded revamp which included a new sound and light show, a re-styled entrance and changes to some of the exhibits.

The promised spike in tourists didn’t happen and visitor numbers have gone backward, so far backward that, this past summer, Flagstaff Hill volunteers were urged to invite family members to the sound and light show, just to help plump up the crowd.

Despite all of this, nobody has been made accountable for the decision to throw good money after bad.

Not one person within the WCC has stood up and said, sorry, we really got that wrong and this is what we plan to do about it.

Not all council-funded facilities have to make a profit, of course, because they serve a greater good, like libraries, art galleries, museums, playgrounds and recreation centres.

But Flagstaff Hill is a tourism operation that is owned and managed by the council and, as a tourism operation, it should be turning a profit, surely. It used to, but that was many years ago.

So what is the council’s plan for the future of Flagstaff Hill, other than to keep expecting ratepayers to foot the growing deficit?

Mayor Tony Herbert told the February 4 council meeting that the council was “monitoring the situation” and looking “quite stringently” at its options, which might sound comforting, but tells us nothing.

He then went on to reassure us that Flagstaff Hill still made a significant impact on the economy by encouraging overnight stays in Warrnambool.

Really? I thought people stayed overnight in Warrnambool because they were tired from the long drive down the Great Ocean Road.

And so on it goes, around and around, with no real answers and no obvious plan.

If the council presses ahead with its bid to break the rate cap of 2.5% or cut essential services, then it must explain to ratepayers how Flagstaff Hill fits into the picture.

And it surely needs to also explain the use of council credit cards for wining and dining.

And its annual expenditure on consultants.

And the more than $770,000 spent on two toilet blocks last year.

And paying $300,000 more for a Simpson St drainage tender than it needed to.

And the $450,000 it will spend on beautifying just one city roundabout this year.

And its corporate marquee at the May Race Carnival that costs at least $17,000 for the day.

Because if we have to save $700,000 a year from the budget for the next three years, this is where we need to start.

Thankyou for hanging in here.

If you would like to see The Terrier keep digging, please make a small contribution below.

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Carol Altmann – The Terrier

How to save $700,000 in seven days, instalment #6:

Today is another reminder rather than a revelation: for at least the past 15 years, the Warrnambool City Council has hosted a marquee at the final day of the May Racing Carnival at a total cost to ratepayers of around $225,000.

I am still waiting for a response on how much the council paid last year for this corporate networking tent, but in 2014 it spent more than $17,000.

For one day.

If we tally this up over 15 years, at an average, conservative cost of around $15,000 each time, we are suddenly up around a quarter of a million dollars.

This money has gone into hiring the marquee, the catering staff, the chairs, tables, decorations, hors d’oeuvres, alcoholic and non-alcoholic drinks, member’s reserve entry tickets and wristbands.

Ratepayers even paid for the race books.

I first wrote about this marquee in 2014, when it emerged the guest list was largely made up of members of council and their partners, local MPs, local executives, representatives from the council’s Melbourne law firm, Maddock’s, a couple of associates of then-councillor Brian Kelson, and current Mayor Tony Herbert, who was invited as the then chair of Commerce Warrnambool.

So much for it being a networking opportunity.

Networking is supposed to involve connecting with people you don’t already know.

Cr Peter Hulin has long challenged the justification for the marquee, but it remains firmly in place.

Indeed when Cr Hulin again questioned its relevance in 2015, then Cr Jacinta Ermacora said the marquee was an important part of the council “supporting the local racing industry”.

This made thoroughbred horse racing sound like some form of charity rather than part of a multi-billion dollar enterprise based on gambling.

I am pretty sure the council could find far more needy causes who are out turning sausages in the carpark at Bunnings each Saturday.

And this is the bigger problem, because while $17,000 a year is not much in an $89 million council budget, it is still a lot of money to a majority of people: this is what the council loses sight of.

It can drop $17k of our money on one afternoon’s entertainment without batting an eyelid or producing one shred of evidence as to its value.

Because it is all about “networking”.

In this case, however, the networking is not working, especially now the council is asking ratepayers to either pay more in rates, above the 2.5% State Government cap, or face service cuts.

The final instalment tomorrow.

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