Much as we might hope otherwise, the pandemic will be with us for some time and its social and economic effects will be profound and permanent. Now is the time for a more expansive vision of our City, not a time to shrink. The old solution of cutting expenditure will not get us out of this continuing crisis but will only deepen it. . . says Progressive Port Phillip's submission to the City of Port Phillip's Draft Budget 2020-21.
This Budget is being framed at an unprecedented time.
We are in the midst of a once in a century global pandemic crisis.
This is a time for leadership.
Actions by governments at all levels at this time do matter. Not to put too fine a point on it, these are matters of life and death.
During this pandemic, Council has taken really important steps to redeploy staff and provide funding to supply food and other essentials to residents doing it tough; provide rate and rental relief packages to businesses and residents; and directly support artists and their work among other measures.
But this is the time to step up further.
There is evidence that Australians’ perceptions of government have improved during the crisis. The highly respected Australian Leadership Index reports that ‘on the back of their handling of the COVID-19 pandemic, public perceptions of Federal, State and Local Governments are positive for the first time since measurement began’ and significantly in advance of public perceptions of private sector leadership.[1]
We are in a better position than many other countries because of Australia’s sustained investments in high quality public health, education and effective government-led stimulus measures. This not an accident: it is due to prolonged public investment in crucial services using a variety of mechanisms and tools.
It is also a time for flexibility and preparedness to adapt as circumstances change. It is likely that this Budget will need to be amended and adjusted as the pandemic runs its course. Councillors and staff need to be open to community concerns and be responsive to challenges as they arise.
This is not a time for smaller government or austerity
Much as we might hope otherwise, the pandemic will be with us for some time and its social and economic effects will be profound and permanent. The relationship between Council, businesses and residents will inevitably be changed.
Now is the time for a more expansive vision of our City, not a time to shrink. The old solution of cutting expenditure will not get us out of this continuing crisis but will only deepen it.
The Grattan Institute says that for the next two years, stimulus rather than austerity should be the priority.[2]
And you can see why. Our community has relatively few COVID-19 cases but it is hurting:
- The number of people on Newstart and Sickness Allowance in the electorate of MacNamara has risen from 3052 in December 2019 to 9428 on JobSeeker Payment in May 2020.[3]
- The number of young people on Youth Allowance (Other) has risen from 136 to 421 over the same period.[4]
- The number of businesses applying to access the JobKeeper Payment in the City is alarming: 1689 in Port Melbourne; 1594 in South Melbourne; 1394 in St Kilda; 819 in East St Kilda; 781 in Elwood and 646 in Albert Park and Middle Park or close to 7,000 businesses in total.[5]
In response to this crisis, the Grattan Institute calls on governments to give priority to small-scale infrastructure spending and maintenance and to fund local councils to bring forward new projects, or to ramp up maintenance spending. Funding should be allocated based on transparent criteria. It notes more than $1.1billion was made available to local government for local community infrastructure projects during the GFC. Nearly 71 per cent of projects were completed by mid-March 2011.[6]
This is a time to invest in people, services and communities
Therefore, Council should proceed with all of its planned capital works program rather than deferring elements.
Council should reverse its proposed cuts to services, especially in libraries, Council assist services, health and early childhood services, streetscaping and tree planting. These services are needed now more than ever.
Council must work closely with trader organisations to ensure that retail shopping strips in the municipality pull through this crisis. These streets are central to the character of neighbourhoods across the municipality and to the well-being and livelihoods of many. This could involve a combination of rate and fee relief as well as co-investment in pop-up activities and collaboration with traders and owners to identify long-term anchor tenants offering services relevant to local residents.
Council should further consider targeted rate relief for residents and businesses in receipt of JobKeeper and JobSeeker payments.
Council should be vigorously advocating with all local governments in Victoria about the way the sector has been left without sufficient support to deal with the hit to revenues and services caused by the pandemic.
Specifically, Council should be highlighting the fact that:
- The Commonwealth Government has deliberately excluded local government from the JobKeeper program
- The State Government has not offered a sector specific support or relief package to local government beyond indicating that local government can borrow in order to meet current challenges.
This is a time to plan for and build the future
The City of Melbourne has brought forward a number of projects in its 20-21 budget, borrowing $200m over four years at a cost of $7.3m in interest charges over this period. This is part of a $463m package of investment that aims to fast track some significant capital works including creating more public open space, renew parks and gardens, enhance recreation and community facilities, and improve waste collection, roads, cycling lanes, laneways and footpaths.[7]
With historically low interest rates, Council should use this moment to plan and undertake work to meet immediate and longer-term challenges, including steps to address climate change; housing affordability; transport congestion and connectivity; demographic change; open space and population growth.
Council should undertake these key steps:
It should address ageing social and physical infrastructure services: upgrade community and Council child care centres to ensure they remain fit for purpose; upgrade and renew libraries, footpaths and drainage – all on the drawing board - through a significant program of investment in these services over the next two years. This is exactly the type of fast-track, easily doable and necessary small project and maintenance work that the Grattan Institute is calling for. And such a program will add to the value of Council’s balance sheet over time.
It should invest in new social infrastructure:
- Working with local community housing providers across the City, State and Commonwealth Governments to build new affordable housing
- Improvements to waste collections and recycling, including procurement strategies
- Greater connectivity and reduced congestion through accelerated implementation of Council’s Bike Lane program and safer, better maintained foot paths.
It should invest in a suite of measures to better prepare Port Phillip for climate change:
- A major program to increase tree canopy cover so as to reduce summer urban heat
- A major program to improve permeability across the City which would be so crucial at times of extreme weather
- Energy efficiency investment to accelerate the retrofit of Council and community assets to drive further reductions in energy costs over time
- Leverage Council’s know-how & influence to secure renewable energy purchasing agreements with benefits for commercial and industrial sectors
- Continued support for the Eco Centre and its building renewal.
We are all in this together
If we get things right locally, we can contribute to a better state and country. If we realise the obligations we have from one to another, we will all be stronger for that.
With interest rates at historical lows, especially for AAA government rated agencies, Council faces an important choice. Not to prudently borrow now, in ways that can strengthen Council’s balance sheet, will leave future generations with massive climate, infrastructure and social debts.
As Per Capita points out: As we emerge from this crisis and start to rebuild, we must focus not on the debt we have taken on, but on the opportunity that lies before us: to remake our society in a way that leaves no-one behind, and ensure that our children have a future to look forward to, rather than to fear.[8]
There is no magic money tree, however. Council must invest prudently and manage resources wisely as a steward for the community.
To help respond to these challenges and to invest for the future we propose:
- Strategic borrowing and use of reserves
- Council has a strong balance sheet that can enable it to grow inter-generational assets at a time when interest rates are at record lows
- Council has built reserves over a number of years to be prudently deployed for the long-term benefit of the City and for use at times of crisis. These reserves have been replenished recently through asset sales. While it must and should retain very significant firepower as the pandemic unfolds, Council should also consider a modest allocation from reserves to help ameliorate the crisis that communities in Port Phillip are facing right now
- Advocacy to the State Government for a new local government loan pipeline through Treasury Corporation of Victoria, especially given State Government encouragement to meet obligations in this way during the crisis.
- Consideration in future of longer-term infrastructure asset financing options, specifically Australian Superannuation Infrastructure Investment Vehicles, a plan supported by the Financial Services Council[9]
- Cutting the 2021 St Kilda Festival
- This saving could be re-purposed to both reverse many of the service cuts proposed in the draft budget and support a significant new municipal-wide live music and arts event program across 2021
- Cuts to reduce the use of external consultants which could be used to build in-house expertise and knowledge and deliver longer term structural savings
- Senior management wage and bonus freeze in FY21
- A practical, no-frills independent efficiency and effectiveness review [i.e. excluding major consultancies] to cut excessive management and ensure alignment with and delivery of the post-Election Council plan.
Council must be flexible and responsive as the pandemic unfolds and communicate deeply with Port Phillip communities about the Budget challenges it faces.
Conclusion
This is a time to build trust, connections and communities.
It is not the time to trim services or delay capital spending.
We cannot assume business will return to usual. This pandemic has exposed too many fault lines in work, schooling, child care, housing, arts, retailing and opportunity to go back to that. We must bounce back better.
It is not the time to be nervous.
It is the time to invest in services, facilities and assets that communities across Port Phillip need now and that our children and their children will use, enjoy and treasure into the future.
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[1] https://www.australianleadershipindex.org/portal/ExecutiveSummary.aspx
[2] Daley, J., Wood, D., Coates, B., Duckett, S., Sonnemann, J., Terrill, M., Wood, T. and Griffiths, K. (2020). The Recovery Book: What Australian governments should do now. Grattan Institute, p40
[3] Klapdor, M and Giuliano, G., The Impact of COVID-19 on JobSeeker Payment recipient numbers by electorate, Research Paper Series 20-21, Parliamentary Library of Australia, 14 July 2020
[5] Source: ATO and Australian Treasury
[7] City of Melbourne, Annual Budget and Plan, 2020-21
[8] Per Capita, Some Facts about Debt, Melbourne, April 2020, p18
[9] Financial Services Council, Accelerating Australia’s Economic Recovery, June 2020