In response to questions from Peter Mitchell ‘letter to the editor’ (CVI 22/3/17). I have highlighted Peter’s questions, with my answers following.
(1) Do you not know how much money that council has redirected from the plant reserves since amalgamation to bail them out of financial difficulties caused by poor management in other areas?
A. I don’t know how much money council has ‘redirected’. I’m unaware of any (apart from your) accusations of “financial difficulties caused by poor management” that “bailed them out”. Now that you’ve made such an allegation of poor management, I hope you have the decency to back that up with some facts.
(2) Do you understand that by selling off the plant fleet that there will be no longer be a plant reserve left to pilfer?
A. I’m unable to “understand” there will be “no longer a plant reserve left to pilfer”, when I know of no instances of the ‘pilfering’ you allege here. Again, would you have some facts to back up such serious allegations please?
(3) Do you understand that the leasing company is obviously going to be making a profit from council if you enter into such an arrangement?
A. The finance provider supplying the current nett debt funds to Council makes interest of around $9 million a year right now. That’s what finance providers do. I’m unaware of any council resolution to source funds exclusively from a ‘leasing company’ or any other specific finance provider. The resolution leaves it open to find the most advantageous source of finance. At the most advantageous time. Most advantageous to Council that is. Do you have any worthwhile suggestions?
(4) Do you understand that unlike private enterprise there are absolutely no tax advantages to be gained for council by entering into a leasing arrangement?
A. That one is easy to ‘understand’. Your references to “leasing company” and “leasing arrangement” demonstrates a serious lack of understanding on your part. Leasing is one form of financing only. Council is not limited to leasing as a finance solution. Your “absolutely no tax advantages” further demonstrates your misreading (or is it deliberate misrepresentation) of the Council resolution. Tax considerations play no part in the resolution.
(5) Do you understand that the council fleet has been successfully managed for many years so as to fund itself, and also at the same time effectively subsidising other areas of council that are either poorly managed or just not as profitable?
A. No I understand no such misrepresentation attempted by your question/diatribe. Debt has funded the fleet and fleet reserve. The fleet has not funded “itself”. You should provide evidence or facts to substantiate your allegations of “poorly managed”. And any instances of “effectively subsidising”. Council has nett debt. The capital held ‘in reserve’ is not savings, not surplus, not profit and isn’t any other form of spare money. It’s debt.
Reports to council by the current senior staff and also hired consultants have also pointed out the pitfalls of entering into such a leasing arrangement, yet Councillor Baker rebuked these as he thinks that he knows better? The 2015/2016 CVC Annual Report shows that the General Manager and three directors were paid a combined total of $883,175 in their salary packages. Surely if we are going to be paying senior staff these amounts of money the information produced by them must have some legitimacy?
It has taken many years for the council fleet operations to be fine-tuned and work as efficiently as they currently do, all this hard work will be out the door in one hasty desperate grab for short term funds.
Councillor Baker appears to be the mastermind of this ludicrous proposal – perhaps he needs to be reminded that it is the ratepayers pockets that will be affected if it goes pear shaped, not just his!
My response to your further diatribe;
At no time have I put myself as ‘knowing better’. My role is to call for expert advice. And to ensure that expert advice is properly informed. It’s not for me to “know better” as you claim, but to “ask for quality advice” as is evidenced by any competent reading of the record.
You are the one claiming “poor management”, “pilfering” and “subsidising other areas of council that are either poorly managed or just not as profitable”.
You put these allegations upon management then say: “the information produced by them must have some legitimacy”.
What’s it to be? Your “poor management and pilfering.? Or your “some legitimacy”, “fine tuning” and “work as efficiently”?
Council needs to do some things differently. That’s a State Government requirement via the Office of Local Government ‘Fit For The Future’ assessment.
The two proposals to address the financial issues have been; 1. a rates rise and promise of ‘future efficiencies’ and, 2. adopt a nil-deficit budget policy plus positioning capital and debt in direct time relation to the benefit derived from those funds. Council has adopted the 2nd. For now.
It remains open to Council to adopt ‘something better’ at any time it finds it.
Up to now there’s been no further proposal of ‘something better’. Not one suggestion, competent or otherwise, has come to council aimed at ‘something better’ to consider.
Your rubbish questions and miserable diatribe continues the ‘nothing better’ on offer.
I’ve ask for some evidence or fact to support your serious allegations of poor management and pilfering. Please have the decency to provide such evidence.
Cr Andrew Baker,