Last week's Council move to increase rates by 2.6% was only the tip of the iceberg as they also adopted the new 2020-2021 Fees and Charges that put up Council fees across the board from Tip fees to pool admission and hall hire to pound charges. To add insult to injury they also voted to increase water and sewer charges and to continue their habit of charging above cost recovery to ensure they pay themselves a handsome profit from the "dividend". The water consumption charge will increase by 2.7% to maintain best practice pricing. The water availability charge will increase by 3.0%. The sewer availability charge will increase by 2.1% Councillor Pat McGinlay forced the Council Director of Finance to admit, in a council meeting, that this was Council's practice thereby explaining to the many who were in the public gallery and watching via live streaming why Eurobodalla water and sewer rates seem so inflated in comparison to other councils. Are Water and Sewer dividends creative accounting? Sept 21st 2019 Without apology the Eurobodalla Council claims that it is all above board that they are legally able to continue with the practice. To ensure the practice continues into the next financial year they voted once again, without debate, for the Water/Sewer Dividend and water and sewer funding offering, by way of justification, that: The declaration and payment of dividends from council’s water and sewer operations to council’s general fund, is tightly regulated and subject to an annual independent audit of council’s compliance to specific best-practice guidelines, followed by a council resolution to allow the dividend to be passed. Demonstrated best-practice management is a pre-requisite for payment of a dividend from the surplus of council’s water supply and sewerage businesses. Council has been formally asked, by a ratepayer, to show proof of the Demonstrated best-practice management is a pre-requisite for payment of a dividend and to date have ignored the request. In light of such dismal treatment The Beagle has now submitted the following request and will keep you advised of Council's response and evidence of Demonstrated best-practice management as required
************************************************************************** Informal GIPA request: LEGITIMACY OF OVERCHARGING TO DERIVE DIVIDEND
It is understood that Council declares it is able to legitimately overcharge ratepayers for water and sewerage services in order to derive a dividend payment, thereby supplementing their income above the RATE PEG set by the state government?
It is however also understood that, in order to do so, there are MANDATORY CONDITIONS which must be met.
The ‘Best Practice Management of Water Supply and Sewerage Guidelines’ set out these mandatory conditions.
Council must comply with the 6 Best Practice Criteria and demonstrate that it has achieved the outcomes for each of the following:
1. Strategic Business Planning
3. Water Conservation
4. Drought Management
5. Performance Reporting
6. Integrated Water Cycle Management(IWCM)
To demonstrate compliance with these conditions council must obtain an independent Compliance Audit Report and an independent Financial Audit Report.
These 2 independent Reports must be provided to Councillors so that they can, “resolve, in a council meeting open to the public, that it has complied with the Best Practice Guidelines” for its Water Supply and Sewerage businesses. (p 34 ‘Best Practice Management of Water Supply and Sewerage Guidelines’ )
Above: Page 99 of the Eurobodalla Shire Council ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2019 "In accordance with the Department of Industry – Water guidelines a Dividend Payment form, Statement of Compliance, Unqualified Independent Financial Audit Report and Compliance Audit Report are required to be submitted to the Department of Industry – Water." The Beagle has now formally requested that a copy of these reports be provided
It is also understood that it is up to councillors to resolve whether a dividend is to be paid or not (p 34 ‘Best Practice Management of Water Supply and Sewerage Guidelines’) and as stated by Mr Sharpe and the GM at the council meeting 7 April.
This informal GIPA request is for Council to provide evidence that they satisfy these MANDATORY REQUIREMENTS. The request is considered to be of public interest as Council have now adopted the DPOP inclusive of Fees and Charges and have specifically stated that they intend to continue with the practice of gaining dividends.
Along with the evidence of compliance mentioned above the following is also requested:
* Does council have a current(updated last 3 years) Strategic Business Plan or Financial Plan for at least the next 20 years (p22 Guidelines)? - as one cannot find it on Council’s website. If one exists I request it too be provided.
* Does council have a current Drought Management Plan(DMP) yet? Council were asked about this Plan by a member of the public on 6th September last year, as it was not publicly available. The one forwarded, upon request was dated 2011 – this Plan is supposed to be updated at least every 5 years.
Mr Sharpe has assured a member of the public by email (13 Sept), “given the current dry period, we have commenced a full update of the DMP leading into summer to ensure it reflects the current context.” “Once the update is complete, we will make the revised DMP available on our website.”
It’s been 9 months and still no DMP on council’s website. Can you please provide a copy or a link to the Drought Management Plan(DMP)
* It is noted that the Integrated water cycle management Plan has not been updated with 2016 census data or recent weather data. This will impact predictions and long term management, planning and service provision. The Integrated Water Cycle Management (IWCM) Strategy is the strategic plan which guides and prioritises actions regarding Council’s management of the urban water supply, sewerage and stormwater systems. The Strategy was adopted in 2003, however a review of the Strategy was undertaken and a revised strategy was adopted by Council on 13 December 2016. Part D of this document provides the information required for the financial plan development (Table 46, Items 10 to 22) as listed in the Water Supply and Sewerage Strategic Business Planning and Financial Planning Check List – July 2014 Without the updates it is of concern that Outcomes are not being met. Can Council advise when the next update will be tabled?
The above stem from growing concerns around council's apparent failures to demonstrate its compliance with the 6 criteria and achievement of the associated outcomes without current updated Plans?
Have the independent Audits been done? Have councillors been provided with these Audit Reports?
Have councillors been resolving compliance with the Guidelines as required? If so, at which meeting/s?
* In a recent response from General Manager re the legitimacy of dividend payments, a member of the public was provided with a resolution passed by councillors(excluding McGinlay and Mayne) Sept 24 2019:
“THAT Council resolve to transfer dividends from the Water and Sewer Funds of $611,900 and $566,440 respectively based upon 2017-18 audited results in the Water and Sewer Funds, and subject to achievement of substantial compliance with Best Practice Guidelines and approval from the Department of Primary Industries, Water.”
This resolution approves the ‘transfer’ of dividends (although it doesn’t state ‘where to’).
However, it does not resolve that council, “has complied with the Best Practice Guidelines” as required by the Guidelines for council to derive a dividend. (p 34)
I request that Council provides, in their response to this email, a link/s to the Council Meeting/s where councillors have, ‘resolved that the Best Practice Guidelines have been complied with.
* The Guidelines also state that it is up to councillors to decide whether to pay a dividend from the surplus (p 34).
All Councillors, with the exception of Clr McGinlay, have just voted to approve the continuation of the dividend payment. At no point in the debate did councillors consider if it was an acceptable and ethical practice to:
- deliberately plan for a significant surplus($3,859,660) in its Water/Sewer Fund, which is essentially ‘overcharging’ and not ‘user pays’
- direct half of the surplus from Water/Sewer Fund as a dividend into the General Fund, thereby supplementing its revenue above the rate peg.
* Council’s Pricing Methodology(p88 DPOP) espouses:
* “fair imposition and user pays”
* “ensure value for money”
* “develop transparent pricing structures that can be ............ understood by the public”
* “it recognises people’s ability to pay”
These principles are not reflected by deliberately overcharging and budgeting for Water/Sewer surpluses/dividends. Nor do they reflect the financial stress currently experienced by many ratepayers due to bushfires and COVID.
The practice of deliberately ‘overcharging’ for water and sewerage services in order to extract a substantial dividend, WAS a decision made by councillors.