Opinion: Regarding the current financial situation at the City of Greater Geraldton, and a brief overview of the last 8 years

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For those of you late to the scene, you might wonder why the Geraldton public are so distrustful of the local council. 

Flash back to 2006

A recommendation was made to the Minister for Local Government by the Local Government Advisory Board in August 2006 to amalgamate the Shire of Greenough with the City of Geraldton.

At that time the Shire of Greenough had a pretty good reputation in the community. They were fair to deal with and were very prompt when it came to building approvals and the like. 

The City of Geraldton did NOT have a good reputation, and many community members feared the mess that was the CoG would become the burden of the residents from the Shire of Greenough. 

But the policitians and bureaucrats felt they knew what was best for the simple citizens of the Midwest, and the Shire of Greenough residents had to petition for a referendum to be held. 

The Greenough electors managed to successfully petitioned for a referendum to determine whether the amalgamation should proceed. 

This was held on 2 December 2006, and of those who voted a majority of around 80% voted against the proposal.

However, the politicians and bureaucrats had a loophole. The Local Government Act 1995 (clause 10 of Schedule 2.1) stated as the vote did not attract 50% of registered voters, it did not meet the requirements for a valid poll.

The referendum only had a participation rate of 28.74% (much like councillor elections which still get counted).

So despite having an extremely clear picture of what a majority of people felt, those in charge at the time found a way to do what they wanted rather than what the residents wanted.

Trust was lost. 

Millions of ratepayers dollars was spent on the rebranding. Fancy new number plates were seen around town. 

But things weren't smooth in the newly created city. Building approvals banked up. Builders complained. Developers complained. 

City staff complained. Some of the good ones left. 

The mood in the town was "they don't listen to us any way", and animosity toward the council grew. 

GFC

Then after all that money was spent on rebranding and "gaining efficiencies" the global financial crisis hit and it emerged that the city of Geraldton Greenough had invested substantial amounts in sub-prime derivatives through Lehman Brothers Australia. 

Why on earth was our rate payer's money being invested in high risk complex securities? Geraldton residents were again furious, and no investigation was launched by the WA Department of Local Government. 

Council had invested $2.45 million.

Yes. Million.

Chapman Valley

After this there were discussions between the Shire of Chapman Valley and the City of Geraldton Greenough about merging. But this was under the looming threat of forced mergers from the state government. 

As soon it became clear there would be no forced mergers by the state government, the Shire of Chapman Valley said "Thanks, but no thanks". 

So like any respectful neighbour, the City of Geraldton Greenough tried to enact an aggressive boundary readjustment on the Shire of Greenough to get a chunk of rate paying land from them and of course the coveted area allocated for the Oakajee Port and Industrial Estate. 

The president of the Shire of Chapman Valley, John Collingwood, said the aggressive boundary readjustment would have destroyed the Shire of Chapman Valley, taking around 37% of the rateable income. He also told the ABC that the City of Geraldton Greenough was "trying to destroy us". 

Those were his actual words. 

So the City of Geraldton Greenough wasn't making any friends. 

The community was again in shock. Who ARE these people!?

More trust was lost. More people up in arms. People in Chapman Valley were vehemently against merging with Geraldton Greenough, and they made it clearly known to their council and the State Government. 

The border readjustment did not succeed by the City of Geraldton Greenough. 

Mullewa

Throughout 2010 and 2011 more negotiations were held. This time between the City of Geraldton-Greenough and the Shire of Mullewa, as to whether the two entities should merge.

After a long period of negotiations they decided to merge. 

A poll was requested by both communities and was held on 16 April 2011. 

Again, an overwhelming majority of voters said NO to the merger. 

In fact, in Mullewa it was 83.24% NO.

And in Geraldton-Greenough it was 72.39% NO.

It did not take a university education to realise once again the people who had actually chosen to make the Midwest home did NOT want this merger. 

However, as with EVERY local government election or poll, there was a lower than 50% turnout. 

So Mayor Carpenter, CEO Tony Brun and the rest of the team pushed forward with the unwanted merger. Because of that loophole mentioned earlier. 

The new weirdly shaped mega region was called Greater Geraldton. 

Most people were perplexed by the odd name. Greenough residents felt ripped off that their brand had now been permanently relegated to the annals of history and would no longer be a noun in daily use by the council and its staff. And many residents asked what we were "greater" than?

Surely folk who live in Mullewa don't tell their friends they live in the "Greater Geraldton" region.

It seemed the only thing the unwanted name had going for it was the ability to keep the same initials.

Most of that earlier rebranding was now money down the toilet. More was needed to be spent on the new rebranding.

The citizens of Geraldton, Greenough and Mullewa were told to drink their medicine because the educated bureaucrats knew what was good for us. There would be "efficiencies" and ultimately everyone would get more stuff for less money.

So to restate the obvious, Geraldton residents didn't want to merge. Greenough residents didn't want to merge. Mullewa residents didn't want to merge. Yet it was forced upon everyone anyway. 

The final straw

Trust toward the council and the city was at an all time low. No one believed the people at the city really had the interests and wishes of the residents at heart. It seemed like Geraldton was a grand experiment for them all to practice what they'd learned at "City Planning School". 

Then the icing on the cake. 

The 2012 rate increase. 

People were in shock. Their annual rates bill came in at a 27% increase. Some people and businesses saw increases up to 30%. 

The line from the city was that this increase was needed to cover the shortfall of rates that had been charged for years. Essentially council wasn't leaving enough money in the kitty to fix stuff, and now they needed to. And the best way to do that was put the rates up 27% in one year. 

Businesses were flabbergasted. Home owners were in shock. The Member for Geraldton Ian Blayney said he was speechless (an oxymoron to be sure, but you get the point).  

Yours truly at that point had two houses in Rangeway and a block in Wandina. In part because of that alarming rate bills along with the promise that rates would continue to increase by 7.2% for the foreseeable future, my wife and I realised we couldn't afford to keep those properties, and sold them all.

Many residents shared similar stories.

If people distrusted the council before this, they hated them with a passion afterwards.

Community groups formed. The Chamber lobbied. Meetings were held.

And the CEO Tony Brun, who was perceived as the main energy behind it all resigned and went to Perth. 

At the next council elections only 6 of the 12 councillors were up for a vote. All 6 were replaced except for Shane van Styn who was endorsed by the community group "CGG Ratepayers Demand Change" as he promised to fight for lower rates and reduced council spending. 

The position of Mayor was not up for reelection. 

 

That's a broad overview, but it brings us up to today. 

The $25million backlog

Now we're being told that decisions made by past councils and CEOs have left us with bills we cannot afford to pay. 

Never mind that the people of Geraldton complained loudly every time money was being wasted and were shut down with intelligent arguments about how necessary that particular piece of artwork or infrastructure was. 

The unwanted mergers that were rammed down our throats came with the promise of efficiency gains that never manifested. 

Instead the city is going to have to take drastic measures to curb spending. Redundancies will have to be made within the City staff. Every area of expenditure will have to be looked at to remove waste and the reduce rate payer burden.

But this is NOT drastic. It should be standard operating procedure. 

Ratepayers money should always be treated with the respect it deserves. It should have ALWAYS been the goal of the council and City staff to find ways to reduce the amount of money they need to take off us each year. 

Do we want sealed roads? Sure. 

Do we need yet another fireworks display funded by ratepayers? Not so much. 

Do we want our rubbish collected each week? Absolutely. 

Do ratepayers want to pay for free wifi for backpackers at the library when there's a perfectly good Internet cafe two doors down? Maybe not. 

The current financial situation

CGG CEO Ken Diehm (if you're not paying attention the CEO is the person who the councillors and mayor employ to run the city) understands this thoroughly. 

His media briefing regarding the CGG's current state of affairs was frank, thorough and humble. He should also be commended on the obvious care he has for the wellbeing of the employees of the City. 

It was clear that he understood that the proposed rate increases for the coming years of 5.2% are too high. He, the city staff and the council say they're going to do everything in their power to get them below that number. 

But he didn't over promise either. He was frank about the fact that there was no way future rate rises would be kept as low as the CPI (consumer price index), as the major costs incurred by the council, like power, were generally rising much more than the CPI. 

Moreover, Ken and his team had commissioned auditors to physically go out to the roads and parks, the highways and byways, to inspect all of the assets of the City.

What they came back with wasn't pretty. 

There's essentially a $25 million backlog of urgent maintenance work that needs doing. That's not the kind of news a CEO who's inherited a position following a 27% rate increase wants to hear. 

Worse than that is the projection for the future. In 2027 and 2028 there will be a spike in road infrastructure expenses that the current CGG budget simply doesn't accommodate for. It might seem like someone else's problem because it's so far away, but kicking the can down the road is what has led to the problem we have now. 

So they're facing the music. Which is something. It could all be buried in an obscure public notice  full of technical terms that would cause anyone other than an accountant to glaze over. 

But to Mr Diehm's credit they've chosen to let everyone know the actual state of the union. 

He also explicitly pointed out that every time we build something new, we inherit the costs of maintaining that item and that is hurting us. Even if the funding to build the new hotness comes from another agency, Geraldton ratepayers still bear the burden of maintaining the infrastructure. For every $10 million in new infrastructure, operating costs increase by around $300,000 a year. 

(Yes, this is logical and many of you have been pointing this out for some time.)

Crisis

I don't think this demonstrates a "crisis" like other media headlines have read. 

I think this actually represents a positive turning point in Geraldton's timeline. 

A "crisis" is having leaders who don't or won't listen to the public they're supposed to serve. 

What Ken is doing is showing he has been listening, and is prepared to make the changes needed to help relieve the burden on the ratepayers even if it makes his job a lot harder and a lot more stressful.

The "crisis" is what would happen in 10 years if we don't make some changes now. What the City is doing by offering its staff voluntary redundancies, going over expenditure with a fine tooth comb and aiming to keep rate increases as low as possible is not a crisis. 

It's good news. 

For the first time in a while it feels like Geraldton is in good hands. 

So what's going to happen? 

There will be cut backs at the city. Staff are going to be offered voluntary redundancies. Ken says these will only be granted where the job can be done by someone else, and won't be granted to poor performers. They're looking for at least 20, and will assess the situation in the new year. (To their credit, the city acknowledges this could be an anxious process for some staff members, and has a free employee assistance program in place. Also credit for announcing now and not a post Christmas shock.)

Then the city directors and managers are basically going to look at all the services that ratepayers currently fund. From the Aquarena, to the Queens Park Theatre, to your rubbish being collected, roads built and maintained etc etc. Everything. 

These services will be categorised into "mandatory" and "non-mandatory" services. Expect things like your bins being collected to be mandatory. But things like free wifi at the foreshore isn't exactly a mandatory service. 

Once it's clear what is mandatory, a budget will be done based on these services.

Then non-mandatory services will be rated in order of priority. The city says it will look for input from the community and city staff to do this. 

Any available funds, less around $7.5million needed to fill the gap immediately, will be applied to the non mandatory services in order of their priority. 

This is where it could get messy. One man's mandatory service is another man's waste of money. You might want more shows at the QPT. Another person might prefer more books at the library. Getting a cohesive list of priorities for non-mandatory services might be a challenge, but at least it's being addressed. 

Any services that are unfunded basically don't make the cut, and will be recommended to council for discontinuation. 

The city is also going to look at the "level" of services it offers. For example (and this is our own example, not a prediction) the city might deem the tip is important to keep running, but might reduce the number of hours it is open. 

In addition to this, the city will be assessing what it does with its current assets. In early January it will be reviewing all its assets to determine if they need to be replaced or can be sold or disposed of. 

New capital works (that's code for "building new stuff") will also be reduced, unless a prior community commitment has already been given. 

Revenue

Other non-rates revenue streams will be looked at. 

There are lots of services that rate payers are essentially subsidising at the moment which might be able to be charged for, and these potential streams of income will be looked at. 

So what does this all mean? 

For most of us, we won't notice a thing. The services we know and use will carry on, and hopefully any future rate increases will be reasonable and bearable. 

For some of us there's a chance a beloved ratepayer funded service may reduce or disappear. That seems to be the reality of the financial situation we currently have. 

But long term what would be most exciting is if a culture of genuinely listening to community feedback and acting on it becomes the pillar of how the City of Greater Geraldton operates.