What they were arguing about, of course, was the expenditure not of government money but of our money — the taxes and levies we fork out in the hope of keeping our society civilised; in the hope that they will be spent in the public good. Inevitably, they are not always spent wisely or fairly — and misdirected expenditure is vast: pork barrelling, projects in marginal electorates, junkets for politicians and their relatives, gold passes, military equipment that will be obsolete before it is brought into service, black-hole support for industries inevitably doomed to fail . . .
The solution to the political wrangling over this never-ending propagandising is to have signs that say, simply, “Your taxes at work”. It’s a nicely even-handed phrase, and certainly true.
While musing on the posturing and hypocrisy of our elected representatives in the national capital, my thinking drifted to yet another charade being acted out in our own Huon Valley. Here, the propaganda appears almost every week in the columns of the Huon Valley News in the form of council press releases, published verbatim, under the banner HUON VALLEY COUNCIL ‘Keeping you informed’, ham-handedly abetted by letter-writing council sycophants.
On September 16, another of the mayor’s occasional “messages” (footnoted as a “Huon Valley Council Press Release”) appeared. “Goodbye winter, hello spring, bring on summer,” warbled the message. It went on to tell us about a new-look “Council Connection” advertisement “paid for by the council”. No, it isn’t paid for by the council, Mr Mayor — it is paid for by the public, from monies collected from us as taxes (rates, income tax, company tax etc).
And, while we are on the subject, who made the decision to enlarge the council’s advertisement, normally a small ad, to a full page on September 23? Looks like another case of “delegated responsibility”. I don’t recall seeing a motion on the subject in council papers apart from a note about developing council’s relationship with the Huon Valley News.
The “connection” is a valid public service. But publication, verbatim, in the News every week of self-serving council press releases — without question or analysis — is an affront to readers.
And, despite a long explanation in the September 23 issue of the News about the way it deals with contributed items, it is still not clear whether the council pays to have its self-aggrandising press release spin published or whether the newspaper sees itself as an honorary publicist for the council.
My musing on civic happenings ran on to a still festering blot on the council’s escutcheon — the not-so-small matter of the likely loss of $4 million of taxpayers’ money (at least a quarter of the council’s cash reserves). It is very much a notional sum these days and could already be lost and gone forever. It seems now that not until 2014 will the council be able to ask for its money back from the CDO (collateralised debt obligations) funds in which it was invested in 2006.
When asked at the September monthly meeting who had authorised the investments, new general manager Glenn Doyle would say no more than that the investment terms had been signed by “two council officers”.
Most intriguing is the way the apparent loss of the money has been handled by both council staff and the people’s elected representatives since news of it became public late last year. And it surfaced only then thanks to the diligence of a keen group of Franklin-based council observers skilled in the whys and wherefores of high finance and willing to put in the online legwork necessary to bring out into the open something, at the time, no one at council wanted to talk about.
To watch the performance of councillors after the revelation last December by the Franklin group, it was reasonable to deduce that our elected representatives were as surprised as the public by both the circumstances of the investments and the likely loss. But they said little or nothing about it in the months that followed. However, a few months into 2009, the then GM did say, in response to a question, that he had the delegated responsibility to invest council funds. (GMs, it appears, from reading the Local Government Act 1993, do not have to spell out in detail actions on matters that come under powers delegated to them by our representatives.)
In the Huon Valley, there seem to be so many responsibilities delegated to the GM that there is not much left for councillors to do but to practise their rubber-stamping skills. (To be fair to council management, there were references to the CDO investments (including their value) in publicly available financial papers, but they were only be found by those with the diligence to do near-microscopic research.)
All that changed at last month’s open council meeting. In the general manager’s seat for the first time as substantive GM was Glenn Doyle. (At the August meeting, he was “acting general manager”, the previous general manager having not yet left council service but unable to be present.)
At the September meeting, Doyle presented to council a fairly comprehensive report on what he says is known about the CDO investment debacle. The good thing about this report is that it comes from a man who was not even employed by council when the CDO investments were made; and, since his return a couple of years ago from Hobart City Council (which he had joined from the Huon Valley Council several years before), he has not managed a department involved in the investment of council monies.
The CDO report itself is a welcome step forward, and is available on
Especially intriguing was the performance of the councillors at last month’s meeting, councillors who previously — despite questions from the public in newspaper letters columns and at “public question time” at council meetings — had had little or nothing to say.
The new GM’s report seemed to have a galvanising effect on councillors. Questions flew. Not much came out that added to the report but the language from councillors — especially about the bank that had advised council on its investment portfolio — had the GM warning them that council meetings do not enjoy the privilege of state and federal parliamentary debates.
That warning just about wrapped up the CDO debate. Among questions unanswered are the level of interest council was told it would be paid when it made the investments (in two amounts, $3 million and $1 million) in 2006; to whom commissions were paid; and why council had chosen to tie up so much money for so long when it always cries poor when setting the annual rate. This year, the council, like public institutions and big business worldwide, was quick to blame the “global financial crisis” for the tight money situation, but it was always reluctant to talk about the endangered $4 million — well, that was until GM Doyle’s report last month.
It seems interest in the 4-5% range is still being paid on both investments, this despite the possibility that the capital is lost. (An August 31 current market value (CMV) of 5.7% on the $1 million investment is quoted in the GM’s CDO report as it appears in minutes to be tabled at the October 13 meeting. This is an amended version of the GM’s September report, the changes being a consequence of advice received from the Commonwealth Bank, through which the CDO investments were made. The $3 million investment at August 31 is given a “nil” CMV.)
On the long-term investment question, the GM’s CDO report says “it is necessary for the council to ensure it has adequate cash reserves to cover all requirements” and that it “has accounts in which it effectively ‘saves’ for larger projects” and that “cash flow requirements year to year can provide (at times) opportunities for longer-term investments to be made”.
That’s all very well, but up to five years? And at, presumably, tempting interest rates? (The council has since found out that, even if the money still exists, the fine print shows it cannot ask for it back until 2014.) Public monies, I believe, should always be invested conservatively and short term.
In the motion passed at the September 9 meeting adopting the GM’s CDO report, the mayor was “authorised to prepare urgent correspondence addressed to the Commonwealth Bank” that expressed “the council’s strong dissatisfaction with the current circumstances relating to the council’s CDO portfolio” and to include “a direct request that . . . Commonwealth Bank provide a guarantee to the council that the value of the principal of the original investments . . . be underwritten by the Commonwealth Bank”.
Unless the bank is in a particularly generous mood, or it feels the council’s account is too valuable to sacrifice, I can’t imagine it being willing to cough up with very much, if anything at all. Such largesse would set an undesirable precedent for the bank. When I cried foul after my flutter at the casino, I quickly realised that, if I didn’t wake up from my nightmare fantasy, the bouncers would be helping me on my way.
Big lessons that should have been learned from the CDO debacle are (1) that the new Huon Valley Council as it is constituted after this month’s elections must treat as urgent a complete review of responsibilities delegated to management; and (2) that all councillors must acknowledge that they, like company directors, are ultimately responsible for carefully scrutinising the performance of management even when a responsibility has been delegated. This will mean for them a lot more careful scrutiny of council documents, especially of the fine print.
It is to be hoped that the promising start the new general manager has made will lead to the root of the CDO issue. Huon Valley Council is not the only one to have got into trouble with CDOs. Valley ratepayers and taxpayers nationwide are entitled to know the full circumstances surrounding what appears to have been cavalier handling of their taxes by too many councils.
— Bob Hawkins is a Huon Valley ratepayer and an advocate for transparency in all democratic institutions. He is not a member of any political organisation.
TALK about pots and black kettles! Recently, the federal opposition was railing against deputy PM Julia Gillard’s decision to keep her Labor government’s self-serving signs on schools that double as polling booths. “Foul,” cried the Lib/Nats. “You did it, too,” Labor spat back.