Sunday, June 03, 2007

John So Passes the Buck

$300,000 Efficiency Report Sees Light of Day highlighting So's spend fest

Melbourne City Council's Efficiency Report, that was the subject of an investigation into Confidentiality breaches under Victoria's Local Government Act has finally been made public, having done the rounds and been widely circulated around Town Hall and leaked to the media.`

The report highlights what most had already known. The City Council is in financial trouble, John So has over spent and the bureaucracy was out of control with Senior Staff redesigning their job to suit their life style and putting on additional staff to deal with the issues that Senior Staff found not to their liking.

In an extraordinary pass the buck John So tried to place the blame and responsibility onto the administration and the CEO, David Pitchford. Whist the CEOI must be held accountable for the financial and governance of the Council Council, and the Lord Mayor, John So, must also be held accountable. It is the role of the City Council to monitor the activities of the administration and set the financial parameters and project priorities.

The role of Lord Mayor is not just to be the cute cuddly icon of popularity. The Lord Mayor is paid over $110,000 per year plus additional benefits (Free food, drinks, a limousine and driver and a host of staff at his disposal- Estimated to be worth over $500,000 per year)

And the buck does not stop there. Other Senior Staff and Councillors are also accountable for the governance of our city.

Melbourne Green's Councillor, Fraser Brindley has tried to distance himself from the fall out that has been exposed by in the Council's $300,000 efficiency report by stating that

"Some of the really big substantial issues have been long known by a lot of councillors and we tried to do something about it but we have been blocked"

what Greens Councillor Brindley fails to mention is that he was part of the problem. Decision and documents that should have been made public have been considered behind closed doors, official meetings of the Council that do not comply with the provisions of the Victorian Local Government Act. Meeting that are illegal. In fact Councillor Brindley was one of the first to recommend that reports on Council financial expenditure be referred to these illegal meeting. meeting that still continue to be held today and are not challenged by Cr Brindley.

Costs associated with John So and his Gary Singer (Deputy Lord Mayor) are not disclosed on the Council expenses Quarterly Statements undervaluing the level of expenses claimed by the Lord Mayor and his Deputy. Costs associated with internal Catering and other costs continue to avoid public scrutiny.

The Local Government Act requites that all meetings of Council be open to the public and that only under certain circumstances can meetings be closed to the public. the need to maintain open and transparency is fundamental to good governance. Every time the Council refers document's to the closed illegal meetings of Council the public are denied access to information.

the Other issue that has not been addressed by the City Council, who are looking for ways to avoid accountability, is the role of the Council's internal Audit Committee. the report has highlighted many serious deficiencies in the Councils administration and the question must be asked why were some of these issues not highlighted by the Councils Audit Committee. The Audit Committee also meets in secret behind closed doors and its monthly reports are not made public.

The other checks and balance in the system is the role of the State Government and office of the State Auditor General and the State Ombudsman. whilst the Office of the Ombudsman has managed to highlight serious issues of corruption the Ombudsman's and the State Department of Local Government have not yet reviewed issues of Council governance and in particular culture of secrecy and avoidance, illegal meetings, decision made under delegation. A breading ground for corruption and and inefficiencies.

The buck stops here, here or here?
Peter Weekes The Sunday Age June 3, 2007

IT [Melbourne City Council] DOESN'T know how many highly paid staff it employs, it approves major projects without knowing the full cost while giving others the go-ahead with no funding, and the duplication between its departments has created "friction".

If it was a publicly listed company, shareholders would be demanding blood. But it's not. It is Melbourne City Council and these are just some of the findings of an independent review of the operational efficiency of Town Hall since John So was elected mayor in 2001 and forced through the appointment of his nominee for chief executive David Pitchford.

The report by Ernst & Young, which was commissioned by Mr Pitchford and the council, follows a series of internal reviews that one councillor said "merely papered over the problems".

"Some of the really big substantial issues have been long known by a lot of councillors and we tried to do something about it but we have been blocked," said Greens councillor Fraser Brindley.

The council is one of the largest in the country, with cash reserves of $117 million and total assets of $2.2 billion. But following the damning report and council's admission that this year's proposed operating budget is about $4 million in the red (despite the report finding annual savings of at least $11.4 million could be made) many are asking where the buck stops.

Some councillors, such as Catherine Ng, who was elected on the mayor's Living Melbourne ticket, argue that the fault lies with the administration led by Mr Pitchford. Others, including Cr Brindley, blame both Mr Pitchford and the Lord Mayor.

The report found that under the council's three differing reporting systems, the number of people earning more than $100,000 varies dramatically; that the council is often provided with insufficient financial information on projects; that financial forecasting is "unsophisticated and inconsistent" with council objectives; and that some departments have their own infrastructure plans with no reference to council-wide objectives.

The Mayor left it to Mr Pitchford to release the report but when asked later if the buck stopped with him, Cr So said: "The chief executive is responsible for the administration of the organisation. He is responsible for staffing and operations."

Professor Ian Ramsay, a corporate governance expert at the University of Melbourne, believes it is reasonable to draw parallels between how a business operates and how a democratically elected council serves its ratepayers.

While he hasn't followed the problems besetting Melbourne City Council, Professor Ramsay said: "Over many years, many public sector organisations have looked to the private sector to see what governance principles and policies may be appropriate to adopt."

Asked whether the buck stopped with the council or its chief executive, he said it depended on the issue. However, "in corporations law, the board is responsible for overall management of the organisation and a key responsibility is to appoint the chief executive, so generally ultimate responsibility would rest with the board".

The council was brought under corporations law by the previous Kennett government. It specifies that the council does not have the power to hire or fire, apart from the chief executive. Councillors say that this has meant they have had no control over soaring staff numbers, which the report found accounted for 97 per cent of the increase in total spending since 2002, despite "no corresponding significant improvement in services".

"I have tried my very best," said Cr Ng, "but if you don't have all the ammunition, you can't do anything. That's why we had to call for the independent report because we can't get the real data if the organisation is not providing that. Every time you ask for something they say it is fine but you can't get access to the books to check it."

One of the largest increases was in the marketing department, where the effective full-time staff has jumped 57 per cent since 2003 and now accounts for 11.75 per cent of the budget and continues to provide "the same functions".

"It's fat," said Cr Brindley. "If John (So) wasn't so vested in his approach we would have addressed this long ago. His cult of personality correlates perfectly with that trend in (marketing) growth."

He said Cr SOS chauffeur was one of those who was paid more than $100,000 once overtime was included, which was more than the base salary.

On the revenue side, the council is bound by the promise made by John So dominant Living Melbourne team not to raise rates during the current term, and is heavily reliant on parking metres.

However, only an estimated 10 per cent of infringements are detected, and a third are provisioned as doubtful debt. It has been a problem for about 15 years. To make matters worse, the council's computer system does not meet the requirements of its recently implemented Infringement Act.

The report also found that while Events Melbourne played an important role in positioning the city to attract tourism, "it was not yet fully effective", covering only about 10 per cent of events.

Welcoming the Ernst & Young report, Mr Brindley said: "Up until this point, the only scrutiny that we have had at Town Hall is the colour of the ice cream John So is licking with Megan Gale.

"Ernst & Young isn't saying abandon ship. These are problems that can be fixed and most councillors accept most of the findings."

The chairman of the Town Hall's finance committee, Brian Shanahan, said the council should adopt some of the report's recommendations immediately to negate at least part of this year's projected budget shortfall.

To council's cost...
■The Ernst & Young report says that unless dramatic changes are made, the council's cash reserves will be gone within a decade.

■Last week the council announced it would retrench 26 staff, with another 100 to go by year's end, saving $6 million.

■If parking infringement rates were lifted by 1 per cent, the council would earn an extra $2.6 million annually.

■Decisions made without full understanding of the costs include City Baths (under-costed by $974,660) and child care ($1.03 million).

■Funding allocation is robust for arts and culture, but subjective and inconsistent for Events Melbourne and Business Melbourne.

■The council charges lower fees for kerbside trading than any other capital city except Adelaide.

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