Friday 27 January 2017

CONSCRIPTED INVESTMENT THE WAY TASMANIA GETS ITS MONEY


The fiscal landscape in Tasmania is starting to be very concerning. When government administrations collude to cut corners, and for the benefit of who knows who, you have to worry. However, it gets worse when the perpetrators of what appears to be fiscal delinquency place themselves beyond accountability and then you know its going to get seriouser and seriouser.

At the Glamorgan Spring Bay Council’s Annual General Meeting, a unanimous motion from the floor was passed querying the state of the Council’s finances. There was also overt criticisms of the processes in play where the General Manager, apparently acting alone, took a decision to apply for a $6Mil loan from Treasury. Now, clearly this is a bridge too far and especially so when management starts making ‘strategic decisions’governance’s preserve – and the State’s Treasurer, Peter Gutwein entertains the whole idea – indeed seemingly endorses the concept.

The Glamorgan Spring Bay $6Mil loan will be substantially directed towards the construction of a dam and the associated infrastructure to supply water for a controversial fish farm. However, what income will this farm be called upon to provide to Council if the infrastructure is funded by a $6Mil 
loan to the council. Glamorgan Spring Bay Council has a a $7Mil rate base? Indeed, has the issue of affordability been addressed in any way at all?  

Given the size of the loan and there being such a small rate base, it appears that a full assessment of the costs and benefits to the ratepayers has never been provided to the wider community. It would also seem that the General Manager, perhaps operating under SECTION 62 of the Local Govt. Act, has not seen fit to present councilors with a fiscal plan nor any other details relevant to the loan that, in the final analysis, ratepayers will pay off one way or another – quite likely via a rates increase or even a reduction of services.

The Glamorgan Spring Bay motion called for the engagement of an external, independent risk assessment and expert advice. That advice would be on the viability of providing commercial-scale quantities of fresh water to the Solis and Tassal companies. Interestingly, the General Manager under SECTION 65 of the Local Govt. Act is required to guarantee that councilors make their decisions based on “expert advice”. Here it appears as though he has deemed his own advice to be both expert and appropriate –and the lender has accepted it

Moreover, the Treasurer, the lender, seems to have done so knowing that ratepayers, or their representatives, have had only scant opportunities to interrogate their fiscal position from a strategic standpoint.

Indeed, did the General Manager have the Delegated Authority to approve a loan of the size he apparently has and has anyone asked him or anyone else about this? That’s something one might think that Peter Gutwein acting as the Treasurer and Minister for Local Govt. might have wanted to satisfy himself about but it seems not.

However, the Glamorgan Spring Bay situation is not an isolated one. In Launceston, by all accounts, the General Manager has been playing similar fiscal games that are equally risky for ratepayers. Just before the last meeting for 2016 it became clear that ‘Launceston’ was borrowing $9Mil for the redevelopment of the CH Smith Building and quite apparently on the initiative of the General Manager and seemingly operating under the aegis of SECTION 62 of the Local Govt. Act. 

While the aldermen, it seems, were on side they were also in the dark as to how this loan was to be serviced in five years. In effect 30 thousand ratepayers have been conscripted to invest in the development with their ‘pay-off’ being a 300 car parking station with questionable income prospects.

If this infrastructure is going to earn the income to repay the loan in the required five years it will need to make a $5,000 per week profit in the timeframe. Presumably Tasmania’s taxpayers will be picking up the interest bill – the same people really. The rhetoric embedded in the notion that suggests that this money is coming from somewhere else – Mars or its equivalent(?) – is quite concerning and deceptive to say the least.

Bach in December when the numbers started to be done in the community Council packed up for the year in the hope that their critics would head for the beach or the bookshop and forget about the issue of ‘doing the numbers’. Then suddenly enough it was 2017 and the borrowing had apparently grown to $20Mil, for an even larger shopping spree, surprise, surprise! This too is apparently the GM’s work and a strategy put together whilst the aldermen were away from the scene and out of sight and out of mind – if they were ever on anyone’s mind.

Apparently Launceston’s aldermen believed that they had to go with the GM’s strategy and there hasn’t been the slightest hint of descent. However, did they  have to and do they have to?

Somewhat curiously this whole process has been expedient and perfunctory. Also, missing is any semblance of the prudential elements one might expect, elements like tendering and consultation that would normally go with a $6Mil public expenditure exercise. Evidently, it’s a cut-corners approval process. It is also a process that raises a raft of uncomfortable questions. Likewise, accountability it seems has been deemed to be discretionary.

Back in Glamorgan Spring Bay, and given the background, and given all the questions to do with a large dam’s social impacts, contention abounds. And, that's not to mention the 
very well founded community concerns to do with financial risk the Council is exposed to. And that's not to mention the risk they are exposed to as residents and ratepayers.  If residents and ratepayers are outraged at the premature and imprudent approval of a $6Mil loan to assist a controversial and as-yet unapproved private commercial operation that ratepayers have been conscripted to fund – and by stealth – it is totally understandable that they might be. 

Ratepayers are worried, and quite reasonably they expect that they will ultimately carry the financial and social burden – and that's the case for Launceston and 
Glamorgan Spring Bay. Concerningly, in Glamorgan Spring Bay it will be the cost of a loan to subsidise a corporate development the majority don’t want that will be the burden.  Those who might support the development are, reportedly, very concerned about the lack of fiscal risk assessment not to mention the opacity around the whole process.

If all this smells a bit fishy then there might be a reason for that? 

If the noxious odour is so strong it might well be time to stop, think and thoroughly investigate the whole process in play – and from a state-wide perspective. The circumstances are such that any such investigation needs to be independent and transparent

Here is the rub, can anyone see the Treasurer or Local Govt. bureaucracies lining up for any such thing as an open and transparent investigation? More to the point, its not especially likely if anything resembling rigorous accountability is involved. Nonetheless, it should happen!

Ray Norman
Launceston Jan 2017

Sunday 22 January 2017

Is this a collapse scenario that's now in play in Launceston

Click here to go to The Examiner
FROM SUNDAY JAN 22  EXAMINER 

"North gathers momentum moving forward 
Piia WirsuPiia Wirsu 22 Jan 2017, 7 a.m.

Treasurer Peter Gutwein’s announcement on Saturday of a $20 million interest-free loan to the City of Launceston is another indicator the city is moving forward. 

The money will go towards a St John Street redevelopment, upgrades to the Cataract Gorge, Brisbane Street Mall regeneration works and a car park at the CH Smith site, fast-tracking estimated completion dates

As state tourism numbers skyrocket, ensuring the North is keeping up and has the infrastructure to both attract and handle tourists, visitors and locals is crucial, and this announcement shows it is on the agenda. 

It is an exciting time for Launceston, and the entire northern region, as the stimulus of improved tourism flow to the state, new events, and investor interest is harnessed to improve the area’s economy and infrastructure. 

This announcement comes on the back of a host of other developments and can assure Launceston residents the city is progressing and will be able to compete with the best. 

Last year saw a host of development announcements, with developer Errol Stewart and architect Scott Curran unveiling designs for a revitalised CH Smith redevelopment; plans announced for a redevelopment of the TRC site including car parking, a hotel and conference facilities; and continuing work on the Silo Hotel development. .

As City of Launceston deputy mayor Rob Soward pointed out, the accelerated projects are in addition to the council’s existing 2016-17 $20 million capital works program

“[This includes] the $9 million North Bank redevelopment, the major redevelopment of Civic Square, the redevelopment and repurposing of Macquarie House, the second-stage upgrade of the Seaport Boardwalk, and the $260 million University of Tasmania relocation,” he said. 

There is a growing momentum in the north, and these developments and improvements are overdue. The optimistic future they capture is welcome. 

The interest and investment from a range of sectors and people is just what Launceston needs to revitalise and continue to grow in tourism, the economy, business and industry. 

With such backing and optimism, the future looks bright for Launceston and the North. Let’s hope continued commitment and interest keeps the momentum up, as the region sets itself apart as a place for tourism, business and investment.

END

COMMENTS FROM AROUND THE TRAPS

FOREWORD: At the start of the working year this editorial speaks loudly about either Launceston Council's absolute cynicism or its ineptitude. The apparent reliance upon 'the punters' being asleep at the beach or off catching up on their reading is too, too cynical for words. In cahoots with 'The Treasurer' it seems that the Aldermen have abandoned any idea of careful fiscal management (Progress With Prudence) and have consequently left 'things' in the hands of 'management'. 

Well not everyone was as 'asleep at the wheel' as the 'cutters and dryers at Town Hall', that is Launceston's Mayor and General Manager have apparently assumed.  In attempting to 'pull a fast one' at tomorrow's Launceston Council meeting this act is just as deserving of the contempt as the contempt the entire Council appears to be holding its ratepayers and residents in.

Is this anywhere near good enough?

The following  comments and questions have been dribbling in throughout today:
Far from being totally 'GOOD NEWS' the implications in this editorial is that Launceston's ratepayers are facing the spectre of their Council putting them into a position that might be described as an unsustainable debt crisis!

 Bulldust is bulldust even when it's printed by 'The Examiner' and far from saving Launceston,  Tasmania's Treasurer is visiting increasing debts upon the city that's ultimately to be repaid by 30,000 ratepayers and arguably for the benefit of a handful of business people working within an outmoded operational/business model.

 Just who is doing the numbers in all this? When one gets down to thinking about that, it's all the more worrying! It is especially worrying when the city's Deputy Mayor Soward comes out as a spokesperson and shows himself to be totally unable to do either "the numbers or the politics". With two chartered accountants on 'the team' just what have they been doing? In fact would you trust these people with your superannuation money?

 Before Christmas Minister/Treasurer Peter Gutwein was lending Launceston $9Million and now its $20Million all to be repaid by ratepayers over 5 years but there's no plausible explanation as to how they'll be doing it.

• Launceston's General Manager, Robert Dobrzynski, before Christmas is reported to have said that the then $9Million Loan would be repaid out of "parking income". Doing the numbers then, that meant that the new parking station was going to need to make $5K per week PROFIT. But who is/was doing 'the numbers' when "the interest free loan" was accepted? More to the pint who is doing them now that the debt is $20Million?

• It has been reported that Deputy Mayor Soward is saying that over 5 years each and every ratepayer in Launceston has been signed up to repay $700 PLUS. When did the community consultation for that take place? Is not this a rates increase by stealth? Is this the end of the 'fiscal folly' that Launceston City Council is embarked upon or is there more to come? How does this increased expenditure measure up against the city's 'Strategic or Fiscal Planning'?

• Just what value is being created via this expenditure and by whom for whom? Are the potential answers to all this being hidden and/or glossed over?

• Does West Tamar Council's decision to seek $1.7Million as an interest free loan for a project already planned for and to only accept 'the debt' after community consultation, actually tell us anything important about Launceston's apparent fiscal recklessness?

• With all this projected expenditure there is not a sausage being mentioned about 'fixing up the Tamar', so does this tell anybody anything at all about Launceston's Aldermen's concern for 'the state of the river', or for that matter 'the environment', or indeed their priorities or even their aspirations for the ratepayers they're paid to represent?

• To what extent has Launceston's fiscal planning changed, over what timeframe and at what cost to ratepayers? Who is aware – that is which Aldermen are aware – of the extent of change or indeed who has even been looking? Who is telling who what?

AND the answers to these questions pose ever more questions but who is going to answer them and/or even has the ability to do so?