1. Rates comparison
We need to be very careful about comparing ourselves to other local governments who deliver different services to different populations with different demands and different expectations and aspirations (as expressed in Strategic Community Plans, which we are required to deliver).
The ways we calculate the rates are different - the overall rate yield (which is an increase calculated year on year) is one figure, the increase in the rate in the dollar is another.
To give you an example: Swan is looking at 3.5% rate increase and we are looking at a 4% rate increase. These figures refer to the rates in the dollar.
The rate yield for both Swan and our Shire is just over 5%. For Kalamunda, it is around 7%.
The rate yield incorporates rate growth; that is, more rateable properties that are coming to the market. We have relatively few compared to large growing areas. Therefore, the costs of delivering services to our community, which our community has said it wants us to deliver, is borne by a greater proportion of existing ratepayers rather than new ratepayers, unlike other local governments.
2. Staff Costs
It has been quoted that there has been an increase of more than 60% in staff costs over the past five years, but this figure comes from a couple of different areas.
The first one is an accounting treatment: prior to 2013 a lot of our staff costs (23%) were incorporated under a different line item rather than under Salaries. We had them under Materials and Contracts until 2013 when it was then transferred across to Employee Costs. This over-inflated the employee costs but there wasn't an actual rise of 23%.
We also have nearly 37 staff that are fully grant and fee funded. That is not paid by ratepayers but the cost is still reflected in our Employee Costs. Many of those staff have been engaged over the past few years because we have added on new services within Children's Services. The programs, which are Federally and State funded, appear as our employee costs. In real terms, our employee numbers over the past four years have reduced.
About four years ago we had more than 177 full time equivalent employees (that is net of those grant-funded positions). This year we have 171.
There is a proposed increase of just over two FTEs in the upcoming budget; we are looking to bring in house a currently contracted service because we can deliver it more efficiently.
In the second year, there will be another reduction, and there are no more increases forecast in the 10 year plan. So our numbers are actually lower than what has been represented in a number of different forums.
3. Wage growth
The wage growth was originally forecast at around about 3.5%, remembering that when we first put together the Long Term Financial Plan, they were the assumptions of the day. They have been significantly revised.
The first year, which is 2016/17, is set because that it is in the Enterprise Bargaining Agreement. The forecast thereafter, as an assumption only, is 2%.
Other forecasts have also changed; CPI is forecast to be a bit lower and interest rates are forecast to be lower. The purpose of the Long Term Financial Plan is to review those assumptions and forecasts annually.
The only loans that we currently have are the ones already drawn down for the significant capital projects Council agreed to last year - the Boya Community Hub and the Mundaring Recreation Centre.
In terms of our capacity to take on more loans, we are already rated close to the advance standard by the Department, which assesses our capacity to undertake or to take on more borrowings. About half way through the next 10 year period, we will exceed that advanced standard.
Loans are important as a mix of revenue sources so you do not end up raising rates just for the current generation of ratepayers. It is spread over multiple generations.
5. Organisation functions and services review
This review is designed to find ways to save costs, or to re-prioritise, by valuing and comparing all of our services. It is not purely looking for the cost of that service delivery, but the value of that service delivery.
How could you compare the cost of the swimming pool versus the cost of upgrading the Darlington Hall? What is the relative value between those two services?
Undertaking the review will allow Council to be informed about the relative value of each of those services. In terms of how that review will go ahead, absolutely there will be a very clear and transparent process.
It is equally likely that we can engage people on short term contracts as it would be that we need to engage consultants. In my experience, there is more value in engaging somebody for a shorter period of time that is devoted to you rather than a consultant who is doing multiple jobs.
Listen to Audio from the Special Council Meeting on 28 June