What is in Orange’s Budget?
As we now know, Orange City Council deferred approval of its 2020/21 draft budget for community consultation from its meeting on 21st April to its next meeting on 5th May. The NSW Minister for Local Government announced on 17th April that she has given councils an extra month to adopt their operational plans and budgets so they can ‘continue to be focused on frontline COVID-19 response efforts’.
Councillor Tony Mileto suggested that the extra time should be used to have a longer period of community consultation. However, that was not discussed and the decision was 7 votes to 4 to defer approval for two weeks to the next meeting. Some Councillors said that they felt they had not had enough time for one to one briefings with staff or to ask questions and put forward projects.
It was pointed out to Councillors that as a result of reporting deadlines that would give Councillors an extra 3 days to ask questions and make proposals. The Chair of the Finance Policy Committee, Councillor Joanne McRae, resigned immediately after the vote was taken. I can understand her frustration. There was a suggestion that Councillors could make their proposals during the community consultation process, but there were concerns that adding major new proposals would mean that a further community consultation process would be needed, which would be difficult even with the extension to 31st July for final decisions.
The discussion begs the question about how the internal process works in developing a draft budget for consideration in public. Theoretically a popularly elected mayor is expected to have more influence over this kind of internal process to make decision-making smoother. The reforms to the Local Government Act in 2009 better defined the role of the mayor to add stature and authority to the role, but not increase powers. The reasoning behind this was that mayors (whether they are popularly elected or elected by Councillors) could make a major contribution to focusing councils on strategic issues, improving governance and strengthening inter-government relations and partnerships with key stakeholders. The fact that the Mayor was one of the Councillors who spoke and voted in favour of a deferral suggests this is not happening at Orange City Council.
There does seem to be some confusion within the report. It stated:
‘the Draft Budget has been developed through consultation with the community via the Community Strategic Plan, with Councillors over the last 6 months and with Managers and Directors via a budget bid process.’
I am not aware that there has been any consultation with the community via the Community Strategic Plan over the last 6 months. Later in the report it is stated:
‘Community Strategic Plan
As the Community Strategic Plan was approved after community consultation in 2018, and no proposals or recommendations have been made at this time; and because of the now extended election cycle it is recommended that the Plan be re-endorsed for the 2020/21 year.’
It will be interesting to see how much change there is to the reports between now and when the reports for the Council meeting of 5th May become public on 30th April.
In last week’s column I wondered whether Orange City Council would be providing for economic stimulus in its 2020-2021 budget and in the report to Council of 21st April, the report stated:
· ‘Through prudent investment and planning, previous Councils have built the Council finances into a solid state. With historically low interest rates and significant equity, it is considered that now is the time to spend and develop Orange into a City of the future. In addition the significant capital spend proposed will inject significant stimulus into the economy at a time where the COVID – 19 issue is creating great uncertainty.’
This is good to hear and consists of a capital spend of $75.9M in 2020/21.
How does this compare with last year’s budget?
The capital budget for 2019/20 was $73.2M, so there is a proposed increase of only 3% in 2019/20, so the claims the Council is making that ‘now is the time to spend….(to) inject significant stimulus into the economy’ is somewhat exaggerated.
I also noted that despite a long planning period of planning for FutureCity the report states that:
‘Delivery Program
Minor updates have been made (e.g. CBD upgrade has included reference to FutureCity as the working title which has been deferred for one year pending a decision on grant funding’.
This is extremely disappointing and flies in the face of the description in the report that this budget will inject significant stimulus into the economy.
Last year Put Orange First made a submission suggesting (among other things) that Council employ a CBD Place Manager to facilitate engagement and speed up planning processes. The Place Manager would also work with local property owners over lease costs and customer service training because of concerns from local business people a year ago about the difficulties being faced, particularly by CBD retailers. The economic situation and outlook is now much worse.
Capital projects over the next 4 years include:
Ø Future City – CBD upscale and renewal $15M a year
Ø Airport - over $3.6M for upgrades and improvements
Ø Gallery extension - $1M of a total $5M
Ø Roads - $7.34M for various roads on the outskirts of town
Ø Water Treatment Plants - $5.6M
Ø Conservatorium - $5M committed though council needs $20M over 2 years
Ø Stormwater Harvest (Stage 2) - $5M with NSW government to provide 50%.
Ø Sewage Treatment Plant - $3M for inlet upgrade
Ø Spring Hill Lucknow sewer strategy $800,000
Ø Double storey car park - $4.5M – it is not clear where this is planned to be
Ø Lake Canobolas enhancements - $1M
Ø Aquatic Centre Expansion - $3M
Ø Wade Park Grandstand - $1M
Ø Orange Civic Theatre - $6M
Ø Industrial Land Projects - $2M
Ø Advancing Shiralee Community infrastructure - $1.5M
Council staff have estimated the impact of COVID-19 on the 2020-21 budget because of closure of a number of income earning services, resulting in an expected deficit of $1.5M. Some Councillors seemed to think that the additional 3 days would result in more certainty in this estimation. As we know, there are 3 quarterly budget reviews during the year at which the budget expectations can be changed, whereas there is extremely limited scope for increasing income because of rate pegging and it is unlikely that Councillors will want to increase fees and charges beyond those already proposed.
The report proposes a general rates increase of 2.59%; water and sewer rates up by 2.5% as anticipated last year. This is at a time when we use less water and the inflation rate has been running at 1.9% for the last 12 months.
‘Land sales will form an important component of the underpinning of the budget. Key sites that will be sold include:
· Old Sale Yards site;
· Clergate Road industrial blocks;
· 1, Summer Street;
· Remainder of the old hospital site.’
I guess the delay does give me more time to comment on the draft Operational Plan, and for Council to include the map showing where the various rates will apply within the local government area, which is yet again missing from the Plan and is a mandatory element of the exhibition. Putting it into the Operational Plan would greatly improve transparency.
I have received feedback that many people find these columns informative and I am happy to receive comments from readers about this column and other issues you would like me to cover so please either contact me at Orange City Life or aes@amandaspaldingconsulting.com