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Who are your rates subsidising?

Chances are you’re making hefty donations to the local soccer club (even though you’re a rugby fan), supporting someone else’s book club and subsidising their tennis. That’s nice of you – and you don’t even know it.

What’s more, no-one really has an idea of the total cost of subsidies handed out by local councils to interest groups ranging from boy scouts to bicycle zealots. Given the total assets of local government and the low returns they generally generate, I’d guess the opportunity costs run into many billions of dollars. And what’s always an unhealthy thing when public money and assets are involved, most subsidies are not publicly disclosed.

A by-product of governance advocate and corporate gadfly Stephen Mayne being elected to the Melbourne City Council is likely to be greater emphasis on disclosure at a high-profile local government, which should in turn rub off on others right down to the Shire of Woop Woop.

Mayne – best known as the founder of Crikey.com.au and, more recently, as an Australian Shareholders’ Association director – reported to his newsletter readers that the Melbourne Lord Mayor Robert Doyle “has enthusiastically embraced the idea of making Melbourne Australia’s most transparent council”.

That’s a title presently held by the suburban Manningham council as a result of change driven by Mayne as a councillor there over the past four years. He says every disclosure proposal at Manningham was hard fought and regularly opposed by the more negative councillors, but change at Melbourne promises to be easier.

“This transparency aspiration will be going into Melbourne's four-year Council Plan, which must be signed off by June 30, 2013. Once it is in the plan, the arguments in favour of a disclosure culture will have formally prevailed and then the detail will flow,” Mayne says – or hopes.

“Despite much opposition along the way, Manningham is currently Australia's most transparent council, even though I failed at the last hurdle on the question of majority support for disclosing the valuations on all individual land and building assets owned by the ratepayers.”

Manningham is the only Victorian council to publish the entitlements, positions and contract terms of its five most senior officers.

“The sky hasn't fallen in since that appeared,” says Mayne. “Indeed, it sailed straight through to the keeper unnoticed in the wider world - until this missive.”

Perhaps more impressive is that the Manningham website is the first (and I suspect only) to include a lease register that discloses the subsidised rental arrangements for 83 groups occupying council-owned facilities. It is an impressive and probably surprising document for rate payers who are unlikely to have had any idea of the scoop of subsidies they have been providing and for whom.

“There is no agenda around ending subsidies or evicting tenants, it's just appropriate that these arrangements involving public assets be disclosed to their owners - the public,’ says Mayne. 

“Once you tell the community what you own, who has access to it, on what terms and what council proposes to spend on it over 10 years, you can then have a far more informed debate with the public around the allocation of scarce capital and appropriate returns (not just financial) for the community.

“For instance, wouldn't it have been a whole lot better if there had been more comprehensive public disclosure of coal mining leasing arrangements in NSW? At least we're now getting it thanks to the ICAC.”

Manningham has an annual budget of about $100 million and net assets of some $1.5 billion. Melbourne City’s budget is $400 million and it has net assets of $3.33 billion. There are bigger and smaller numbers in a sector that is largely overlooked when national productivity and accountability issues are raised.

Local government is very big business with governance mostly left to well-meaning amateurs and, occasionally, self-interested opportunists – that being the nature of parish pump democracy. Allowing sunlight to shine on all forms of subsidy would help the former performer and hinder the latter.

There are vastly more important transparency issues than what the Scout Association pays Manningham Council to use 45 Yarra Street, Warrandyte, for dib dib dibbing  ($11.96 a year) or the $12.28 a year the Tunstall Square Kindergarten Association pays for 77 Tunstall Road, Doncaster East, but that disclosure is healthily symbolic of the approach that also needs to be taken to the big ticket issues of planning and building approvals. Mayne’s election to Melbourne Council could prove to be one of the more interesting outside state and federal politics.

Michael Pascoe is a BusinessDay contributing editor. 

37 comments

  • At last subsidies and grants are on the agenda. I have no qualms at all with scouts or any other such organisitions getting tuppence a year from the public teat. That is money well spent. It is all the other parasites that get the big bucks that so distort the entire economy and is very hard to justify. Start with the car makers. How the hell we can still be subsidising these over paid, heavily unionised multinationals is beyond me, especially seeing that car sales are at record levels. When if ever will we wean these bludgers off the gravy train. Second up, these arts grants which are really just middle class (or upper middle class welfare?) The mob who went into liquidation yesterday owing a million dollars after receiving $1.1 million in grants. Who actually monitors these grants & subsidies? It is scandalous that so much money is just pissed away. Maybe Steve Mayne should be giving the job of approving any grant or subsidy over $5000k. You can see why Tea Party is so prominent these days.

    Commenter
    Brisbane Bear
    Location
    Brisbane
    Date and time
    January 10, 2013, 1:15PM
    • Yeah! Stupid art.

      Commenter
      JDG
      Date and time
      January 10, 2013, 2:00PM
    • Have a cup of concrete and live with it. These grants create and keep jobs. Would you rather all these people being on welfare and not working ? Think about it as the second option will cost YOU more.

      Commenter
      bert
      Date and time
      January 10, 2013, 2:03PM
    • Agreed. Do not get us started on private school funding, over paid Fed/State gov 'contractors', welfies and the RICH who use the corrupted Aussie tax system to pay zero tax, receive family allowances but who run a million dollar a year business through various trust schemes!!!

      Commenter
      Liberator
      Location
      SEQLD
      Date and time
      January 10, 2013, 2:47PM
    • My council recently donated $90,000 to the local primary school (State run) for their playground. One of my neighbours rightly pointed out that councils should not spend ratepayers money on something the State government should be fully responsible for and tried to get information under F.O.I. from Council to find out who made the decision and why. He eventually got some information after pain and struggle but Council refused to provide all the information so he is not much wiser as to their rationale.

      We could do with somebody like Stephen Mayne on our council to better the disclosure and transparency.of what goes on within.

      Commenter
      Spendthift
      Location
      Sydney
      Date and time
      January 10, 2013, 5:12PM
  • Michael, you might be interested in checking out Charles Marohn's StrongTowns initiative (strongtowns.org). Local councils and municipaliites run ponzi schemes in ways you won't imagine.

    Commenter
    Jonathan
    Location
    Melbourne
    Date and time
    January 10, 2013, 1:23PM
    • We need transparency at *all* levels of government!
      From Howard's "secret" evidence of Iraq's WMD's to state run PPPs...it is clear that accountability is on the decline.

      Commenter
      Andy
      Location
      Melb
      Date and time
      January 10, 2013, 1:46PM
      • Andy, nice try on the partisan comments, but perhaps you should take a look at your preferred party. Given the article is about money being stolen from taxpayers, NSW Labor figures recent theft of $100m plus of coal leases is probably more relevant than WMD's a decade ago.

        Commenter
        JamesM
        Date and time
        January 10, 2013, 2:57PM
      • I don't understand why people keep harping on about Sadaam not having weapons of mass destruction. Sadaam used nerve gas to murder thousands of Kurdish men, women and children in their homes and streets of their villages. Sadaam also deployed this gas in the Iran/Iraq war killing tens of thousands of soldiers. Chemical weapons ARE weapons of mass destruction, people who deny that he had them are not right.

        Commenter
        Jim Crusty
        Location
        The Bush
        Date and time
        January 10, 2013, 3:09PM
      • And if you recall, Ted stated loud as an election promise that his govt would be one of the most transparent Victorian Govts.

        Since he got in it has been the opposite. Apparently you can say anything and it means nothing when in the seat.

        Good on Mayne, we need more people like him.

        Commenter
        JPC
        Location
        Melbourne
        Date and time
        January 10, 2013, 3:55PM

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