Council through a business prism

Central Coast Council’s Gosford Chambers

Forum –

It’s my view that politicians and (especially) councillors (should) be eligible for office only if they have been intimately involved in private enterprise for a solid period of time.

Preferably in business for themselves with money at risk, or at least in a senior capacity for a larger goal/budget driven entity.

This way they learn a raft of critical skills, from strategy to cashflow and everything in between.

Without one’s belly to the ‘Bunsen-burner’ via risked capital (home mortgage, personal loan) or operating under strict corporate goals it’s nigh on impossible to expect elected incumbents to have the necessary experience to govern wisely.

As someone who has merged many businesses I’m astounded that an underlying NSW Government ‘specification’ for the Gosford/Wyong merger (and presumably other councils) was “no forced redundancies”.

This remarkable ‘millstone’ effectively handcuffed implementers’ hands and massively limited potential merger benefits.

No private enterprise business would ever countenance such a mandate as benefits almost always include staff rationalisation, unless significant and imminent expansion is envisaged or skills are unique and the acquired business is to be stand-alone.

Not the case with these councils and I wonder if any of our local politicians understood this basic reality and lobbied the then Minister for Local Government (Shelly Hancock) and/or Treasurer (Dominic Perrottet) for release from this debilitating obstacle?

I’ll bet not and if so they’re surely complicit in Council’s debt failure.

Council’s ‘Delivery and Operational Plan’ proposes to reduce its workers from 2500 to 2000 in 2021/22 (what should have happened at time of merger).

Its ‘employee costs’ budget this year is $176M, the proposed 20 per cent reduction equating to $36M or a year two 22/23 budget of $140M, yet the ‘Plan’ is for $180M, rising to $189M after four years.

How can this be?

Where’s the proposed saving?

The budget for ‘materials, contracts and other’ is essentially a constant $290M per annum over the next four years; no real savings or costs proposed.

Yet surely at least a 10 per cent reduction could be found midst these merged monoliths?

If so, this would equate to another $30M which when combined with the worker’s saving = $70 to $75M = say $300M over four years?

Borrowing costs are shown as a fairly constant $17.5M on $347M of loans/financing, equating to an average 5.4 per cent pa interest cost.

Is this the best (an effectively guaranteed, tax free) Council can achieve when prevailing home variable mortgage rates are about 2.5 per cent?

Every additional one per cent of Council interest rates equates to $3.6M.

Also, no balance sheet is provided?

The now proposed “essential” 15 per cent rates increase over 20/21 rates income of $332M = $382M.

Budgeted for 21/22 is $362M, rising to $400M over the four-year plan.

So why can’t this $50M proposed increase be offset by the potential $70M savings identified above?

There may be some logical answers to my comments above, if so I’d love to hear them.

Email, Oct 8
Gordon Batt, Terrigal