Progressive Port Phillip welcomes Council’s continuing investment in important community services outlined in the draft 2021/22 Budget and the opportunity to contribute to Council’s finalisation of it.
Overview
We commend the Council for maintaining and bringing back important community investments reduced in last year’s budget.
In particular, we support:
- Restoration of a decent library acquisitions budget ($950,000)
- Restoration of significant funding for greening the city ($740,000) to increase tree canopy cover significantly
- Continued funding commitment to flood mitigation at Elsternwick Park
- A $46m capital investment in parks, open spaces, bike and foot paths and libraries
- Continued support for the EcoCentre and its redevelopment, subject to partner/State Govt funding
- An initial response to the climate emergency
- Achieving carbon neutrality in Council operations and services
- $35m in operational & capital funding for the arts and culture over the next four years
- Continued investment in community, family and childrens services
- Keeping the South Melbourne market in Council ownership and management
- Significant rate relief measures for people doing it tough.
This Budget is being developed at a time when considerable uncertainty exists about the short and medium future and the ongoing impact of the COVID-19 pandemic. It is framed by twin emergencies – a pandemic-induced economic emergency that has negatively affected Council’s finances and many of the City’s residents and businesses; and a damaging climate emergency which calls for urgent action to reduce carbon emissions, increase the City’s tree canopy and use water more efficiently and sustainably.
Our further response is laid out in four detailed sections:
- Shifting priorities – for equity and fairness
- Responsible financial management
- A rate freeze would cut services for all to benefit only a few
- A higher level of ambition and a stronger vision
Shifting priorities – for equity and fairness
The draft Budget includes small but important cuts to some programs including free entry to Rippon Lea Estate Gardens for Port Phillip residents [$50k], the community childcare subsidy [$141k], arts programs [$56k], reception services at South Melbourne Town Hall and embeds changes to bike education programs including Ride2School Day, Healthy Tracks, Ride2Work, and Festival of Everyday Riding. And Council is proposing to reduce footpath renewal over the next ten years.
Let’s go through a few of them:
- The community childcare quality subsidy: supports families and young children in our municipality, especially those most vulnerable, by enabling community-managed childcare centres to continue to provide high quality education and care while maintaining affordable fees for all families. Quality childcare provision is not a ‘tick and flick’ exercise but a constant challenge that needs to be resourced.
- Rippon Lea Estate Gardens: Ripponlea, Balaclava and East St Kilda are the most poorly served with open space in the municipality – five percent compared with 19 percent in other areas [Open Space Strategy 2009]. Yet for a relatively small cost to Council, Port Phillip residents currently have access to open space equivalent to the St Kilda Botanic Gardens for a tenth of the cost. We all benefit from a smart deal negotiated by the previous Council which should continue, especially for open space-poor residents of Ripponlea and East Kilda.
- Arts programs: are vital to the cultural life, identity and economic base of Port Phillip. The sector is attempting to recover from a disastrous 2020 pandemic year and a cut of this magnitude at this time will set local artists and venues back further.
Funding support for the Friends of Suai is proposed to be phased out over time. This is not a charity or a community group, but in fact a Council program formed over 20 years ago between the municipalities of Port Phillip and Suai, and with a recently re-signed MoU with Suai. Timor Leste has recently experienced the worst floods in 40 years. It remains highly vulnerable to COVID-19 outbreaks. Withdrawing support in these circumstances is harsh and unwarranted.
There is no policy logic behind these cuts.
These cuts and others could be reversed at no cost to Council through a small shift of some proposed operational spends: for example, not proceeding with increased pressure cleaning on main streets [$400k this coming year].
Other modest steps are also available to free up resources for the soft and hard infrastructure investments needed in the wake of the pandemic. These include:
- Reductions in the use of contractors [up $1.3m in the coming year to nearly $5m]
- Transitioning the St Kilda Festival [est. cost more than $1.5m per year] over time from an annual one-off event to an authentic community festival of arts, music and culture over a longer period.
Savings from these measures could be applied to areas that desperately need more support including childcare, aged care and affordable housing, which collectively total just $3.61 of every $100 in rate income spent by Port Phillip Council.
A shift is needed over time to a more equitable infrastructure investment across the municipality, in particular to address the relative lack of open space, community amenity and greening in Balaclava/East St Kilda. Just $3m will be invested in Balaclava/East St Kilda over the 2021/24 period, while all other areas will see double or triple more spent on similar infrastructure. This inequity must be tackled through re-considering priorities in future budgets of this Council to improve the amenity of this part of the municipality.
- Proposals such as gradually but methodically building a $10 million open space fund dedicated to greening East St Kilda and Balaclava over time should be seriously considered.
Efficiency savings equivalent to one per cent [approximately $1.9 million] of operating expenditure [less depreciation] per annum are mentioned in Vol 2 of the 2021-31 Plan.
Initiatives to deliver these savings include a service review program to better define service requirements and target support, a commitment to better-practice procurement and asset management, the sale of surplus properties and investment in business process and system improvement.
Council must be much more transparent with the community about these reviews, asset sales and ‘systems improvements’ Why is this savings process not subject to the same community consultation as the measures listed above? To deliver these savings, does this explain in part the proposed increase in external contractors and consultants in 2021-22?
Responsible financial management
The draft Budget is fiscally responsible with Council budgeting for a modest surplus to cover an operating loss [$13.6m] during the pandemic and to build a foundation for capital investment in open space and improved community amenities in the future.
A 1.5% rate rise provides scope to maintain programs and avoid major cuts to community services. This increase is in line with inflation, commensurate with increases flagged by other local governments for the coming financial year and equates to an average rise of $27 a year to $1818.
Residential rates in Port Phillip remain among the lowest in metro Melbourne noting Port Phillip is one of the few Councils that doesn’t impose a waste/recycling charge on residents.
How does Port Phillip Compare?[1]
|
Local Government |
Rate Rise |
New Borrowing |
Residential rate/tax base |
Average property value |
Average Council Rates[2] |
No. of residential properties |
|
Glen Eira |
1.5% |
$65m over 2 yrs |
$72.8 billion |
$1.045m |
$1763 |
69,648 |
|
Stonnington |
1.5% |
$15m |
$82 billion |
$1.372m |
$1793 |
59,757 |
|
Port Phillip |
1.5% |
Nil |
$58 billion |
$872k |
$1818 |
66,632 |
|
Bayside |
1.5% |
Nil |
$68.2 billion |
$1.571m |
$2252 |
43,381 |
|
Yarra[3] |
1.5% |
$20m |
$43.3 billion |
$898k |
$2484 |
48,152 |
|
Melbourne[4] |
- |
$204m over 3 yrs |
$66.1 billion |
$614k |
$2482 |
107,769 |
|
Hobsons Bay |
1.5% |
$7m |
$31.6 billion |
$798k |
$2717 |
39,573 |
[1] Sourced from draft Council Plan and Budget Fair Go reports 2021/22
[2] Includes waste charges where applicable
[3] Residential property values relate to 2020/21 Budget
[4] Melbourne budgets for a 1.5% increase in line with the capped rating system & then applied a 15% discount using internal resources to fund it, including an underlying $26.2m deficit in 21-22
Port Phillip has a lower residential rate base than its immediate municipal neighbours because average property prices or values in Bayside, Stonnington and Glen Eira are higher in these areas. This means Port Phillip’s residential rate base is $24 billion lower than Stonnington, $15 billion lower than Glen Eira and around $10 billion lower than Bayside. And is reflective of quite different housing types and rateable properties in Port Phillip, more typical of other inner municipalities such as Yarra and Melbourne.
Rates are property taxes to enable delivery of local services and infrastructure for all within a municipality, not a local government ‘fee for service’ charge on home-owners.
Benchmarking municipalities is a difficult exercise given diverse populations, infrastructure requirements and revenue sources. This is definitely not a case of one size fits all. Just taking the ‘rate in my property value dollar’ as the key measure of performance or efficiency is a gross distortion given that each municipality must balance its residential property or revenue base with particular infrastructure requirements, ageing assets, the needs of its residents and businesses and duty to ensure a truly socially inclusive and environmentally sustainable community.
The basket of municipalities chosen by one local group as comparators for Port Phillip is quite narrow and, perhaps, deliberately so. Glen Eira, Stonnington and Bayside are essentially dormitory municipalities with few of the capital city-type planning responsibilities and economic and social services required of Port Phillip, which include the biggest urban renewal project in the nation at Fisherman’s Bend; hosting major arts, hospitality and cultural venues; and servicing significant centres of employment.
Crucially, Port Phillip is home to a more diverse population in terms of:
- Housing and property type [many more flats and apartments than freestanding homes]
- Composition of households [including more people living on their own]
- Education, income and cultural background
No comparison is sufficient without considering home ownership and wealth.
Around half of all households in Port Phillip are renting [44 percent in private rentals and five percent in social housing], one of the largest proportions in the nation. Councillors need to recognise the gulf between many people trapped in the private rental squeeze and property investors advantaged by rising property values. A rates freeze would come at a big social cost: disproportionately advantaging some while resulting in cuts to services for the most vulnerable in our community.
These factors place particular infrastructure and service delivery demands on Port Phillip.
Unfortunately, while many other municipalities are borrowing to fund new infrastructure Port Phillip is proposing to retire $7.5m of debt in the coming year. We think this is too timid at a time when the City’s balance sheet is strong, ageing assets require renewal and improvement and the cost of borrowing is at historically low levels.
Council has identified a host of projects and facilities that need investment – from libraries to childcare centres to bike paths - that could be addressed more quickly and that, well-managed and procured, would provide local economic stimulus.
These could be brought forward and funded through judicious borrowing or a modest increase in drawdowns from reserves.
Council has a capacity to borrow up to $80 million and still achieve a low-risk rating by the VAGO [Victorian Auditor-General’s Office] financial sustainability risk assessment. To be clear, Council must hold reserves at levels sufficient to ensure operational liquidity and for contingencies - but it can also apply cash reserves to at least part fund major capital works. Over the next four years Council is forecasting a net drawdown of $4 million from reserves.
Predicted operating results and year end cash position indicates that outyears operating surpluses will increase as will the year end cash balances. Therefore increasing the funds available for future investment in the City of Port Phillip community.
Fast-rising property values in Port Phillip are a function of a ‘hot’ property market with historically low interest rates and what even economists now call FOMO: fear of missing out. Real estate agents confirm that local property prices and values are driven significantly by the amenity that can be found in Port Phillip: a legacy of decades of improvement and liveability undertaken by previous generations. Parks and open spaces, great foreshore, high quality streetscapes and outstanding community services that make this place so attractive are the result of past borrowing and investments made through rates by previous Councils.
The task of our generation is to invest in a better environment for future generations, not to depreciate the community assets and amenity we have inherited for our own private benefit.
A rate freeze would cut services for all and benefit only a few
At least one councillor has advocated an intriguing vision for Port Phillip: that it become the Monaco of Victoria. That’s right, a tax haven for the rich and famous to indulge, right here in Port Phillip.
In the first six months of the new Council, four councillors voted against re-purposing already existing expenditure to support for our local shopping strips hard hit by the pandemic; against assistance to small live music venues; and opposed funding for safer bike paths.
Now they want a rates freeze for 2021/22: a cut in community services that we all rely on and enjoy – only to advantage wealthy property owners.
A rates freeze may sound seductive, but the immediate impact would be a $3.9m hole in the 2021/22 Budget and Council’s ability to fund vital community services, to meet rising waste management and recycling costs and other above CPI cost increases.
Due to the complexities of Victoria’s rating system, a rate freeze now would leave a compounding funding gap of close to $14.5 million over the next five years.
The onus is on those seeking a rate freeze to identify how they would balance the books: we know some councillors have a hit list of cuts that include the currently free hard and green waste rubbish collections; support for local arts including live music, Linden Gallery and Gasworks Arts Park; local action on climate change; and Council’s investments in social housing.
Councillors supporting a rate freeze or a reduction in the proposed 1.5% increase need to be upfront and transparent with the community about what they would cut.
Some residents are asset rich but relatively income poor. They are proud members of their local community. But the best response to residents in these circumstances is not to freeze rates for all but to offer targeted relief to people facing difficulty. Port Phillip provides one of the most generous and effective rate relief programs in Victoria. We applaud Council for that and hope it may consider further steps.
A higher level of ambition and a stronger vision
This is a time to build back differently from a devastating pandemic. The pandemic, despite the deep trauma and pain it has inflicted, has also opened our eyes to really important features of our community that perhaps we too often took-for-granted: our neighbours; open space and skies; childcare, carers, schools and teachers; bike paths and safe foot paths; our local businesses; our artists and musicians; our health services and much more.
More than ever, we need a Council that reflects these times, especially the importance of community and shared connection - and that has a vision for all its citizens, not just a few.
Stronger and more consistent engagement with the community required, especially through quarterly Ward meetings.
Port Phillip Council can and must aim higher to meet the environmental, social and economic challenges ahead. Equity, fairness, creativity and sustainability must be at the heart of our Council and reflected in its ambition and vision for this community.
As we have shown, these challenges can be met through responsible financial management, including shifting some operational priorities, prudently drawing down from reserves and judicious borrowing for inter-generational capital projects [but not operational matters].
We have identified four key areas that need to be elevated.
Climate Change, Waste and Environment
There is an uneven understanding of the climate emergency in the community. Council can and should play a crucial role in equipping citizens to address the climate and environmental tasks ahead - in ways that can reduce costs to them, local industry and our environment. Continuing local environmental community education and action is crucial. That’s why supporting the Port Phillip EcoCentre is so important.
Another important step is to start is with what we all do every week: putting out the bins. Over the next four years, Council must move from food organics and garden organics (FOGO) bin trials in neighbourhoods to a municipal-wide rollout of the program. This sends a strong signal about how local citizens can contribute to a better environment and a more responsible supply chain but it is also good for Council as it will reduce waste going to landfill and thus reduce exposure to landfill charges and fees.
While Council intends to explore working with other councils to increase awareness and access to renewables, funding is not identified for this. The next Council Budget should include a leading role for Council in addressing the main source of local greenhouse emissions – local industry. Council should fund a project to facilitate a power purchase agreement for industry which makes up 80% of community emissions in Port Phillip.
With more extreme weather events, better use of storm water must be systemically integrated with greening and open space strategies. Those events also prompt the need for higher tree canopy targets and planting. Urban shade areas, already important, will be increasingly vital in coming years and must be a key focus over the remaining Council term.
Active transport connections: for people and for bikes
We have learned through the pandemic that safe, active transport connections through cycling and walking are critically important to community well-being. Therefore, the cuts in active cycling participation programs is especially disappointing.
Council’s 2018 integrated transport strategy, Move, Connect, Live proposed to complete eleven cycling corridors by 2027/8. In the proposed Council Plan there are only three major cycling infrastructure projects listed, including the proposed completion date of 2026 for the Inkerman Street bikeway, after the next Council Election.
These capital projects should be brought forward through prudent infrastructure funding as outlined above.
And rather than reducing the spend on footpath maintenance over the forward estimates, pedestrian safety needs urgent improvement.
Housing
While Council acknowledges the deep housing crisis within the city, much more needs to be done to address it.
As Council’s Draft Plan says:
Port Phillip has some of the most expensive housing in Victoria, with only a small proportion identified as affordable. The problem of housing affordability has broadened in Port Phillip, from affecting the lowest 50 to 60 per cent of the income range in 1995 to affecting the lower 70 per cent of the income range in 2015. While 44 per cent of Port Phillip residents are renting their homes, less than one per cent of private rental housing is affordable to low-income households.
Despite this situation, implementation of the flagship In Our Backyard strategy is at risk. Council must inject cash or properties or other equity to take advantage of the Victorian Government’s $6 billion Big Housing Build investment to grow affordable housing.
This Council cannot rest on the municipality’s history of national leadership on local social housing projects and investments. The diversity, affordability, vibrancy and liveability of our community is at stake. It must act on the In Our Backyard strategy and if this is not now achievable, it must develop a new roadmap to ensure Port Phillip has homes for more people who need them.
Maintaining and rebuilding community infrastructure
The systems and assets built in the nineteenth and twentieth centuries are ageing and in need of renewal. These include our town halls, libraries and childcare and aged care centres. Deferring these projects is not necessary, given Council’s strong financial position. There is scope to bring a number of projects forward over the remaining term of this Council.
Summary
In summary, Progressive Port Phillip supports the City of Port Phillip’s draft 2021-22 Budget.
We do not support the proposed cuts and have especially highlighted the community childcare, Rippon Lea Estate Gardens and arts program cuts, which could all be addressed through an adjustment in operational priorities including not proceeding with increased high pressure water hosing of main streets, cuts to the contractor/consultant budget and other measures.
There is an urgent need for much greater transparency with the community about a proposed ‘service review program’ expected to deliver savings of $1.9m per annum.
A rate freeze is not justified and indeed would punch a major hole in Council’s finances in coming years.
There is a need for regular Ward meetings between Councillors and citizens to ensure stronger information flows and improved community engagement.
We call on Council to have a higher level of ambition and boldness to address the challenges facing Port Phillip in future Budgets, especially in relation to action on climate, environment and waste; local bike and foot paths and walking routes; affordable housing and infrastructure renewal.
Dr Rhonda Small, Dr John Spierings & Jack Halliday
for Progressive Port Phillip
17 May 2021
[1] Sourced from draft Council Plan and Budget Fair Go reports 2021/22
[2] Includes waste charges where applicable
[3] 2021/22 Budget not yet released - figures relate to 2020/21 Budget
[4] Residential property values relate to 2020/21 Budget
[5] 2021/22 Budget not yet released - figures relate to 2020/21 Budget