No pay cuts for council CEOs, councillors during coronavirus crisis

While Melburnians suffer unemployment and lost livelihoods, nearly all your council executives continue to enjoy full six-figure salaries. And our special investigation reveals at least a third of our councils want to boost rates this year.

Councils have defended their responses to COVID-19, arguing they are suffering millions in lost revenue.

Victorian councils want to whack homeowners and businesses with multimillion-dollar rate hikes in a bid to claw back losses from the coronavirus pandemic.

Major metropolitan and rural councils have begun revising their 2020-21 budgets, with many projecting millions due to the closure of facilities like pools and absent parking fine revenue.

It comes as an exclusive Herald Sun/Leader investigation reveals most metro chief executives – all of who earn six figure salaries – mayors and councillors are refusing to take a pay cut.

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This is despite many of those being unable to carry out normal duties during the pandemic and thousands of casual staff being laid off to cut costs.

Our survey of Melbourne councils revealed they are not heeding Ratepayers Victoria’s pleas to suspend rates during this time.

While most are yet to vote on their 2020-21 budgets, about one third have already proposed a 2 per cent rate hike in line with the state government’s rate cap.

Many councils have told the state government they will apply to the Essential Services Commission for a rate cap exemption in 2021.

It can also be revealed up to nine rural councils, previously flagged as facing sustainability challenges by the Victorian Auditor-General’s Office, may be on the brink of collapse after facing years of decreasing population levels and diving revenue.

There are ongoing concerns for Queenscliff, West Wimmera, Hindmarsh, Loddon, Gannawarra, Buloke, Yarriambiack, Towong and the Pyrenees, which may need help from the state government moving forward.

In Melbourne, Maroondah Council was expecting to lose $5 million in savings and cut a further $5 million in expenditure as it faced steep losses in revenue.

Melbourne City Council raked in $93 million in fine revenue in 2018-19 but with parking inspectors stood down the revenue loss has not yet been revealed.

Port Phillip Mayor Cr Bernadene Voss (left) says the council’s chief executive was not considering taking a pay cut but would continue donating a proportion of his salary to charity.

Port Phillip Mayor Bernadene Voss estimated the pandemic will cost the council $40 million, including at least $15 million in parking revenue over 15 months.

Earlier this week, Colac Otway Shire told 34 employees and about 50 casual staff they were likely to be stood down because they did not qualify for JobKeeper payments.

After years of councils jacking up rates as high as 7 per cent in one year the state government introduced the 2 per cent rate hike cap in 2016 to limit increases to inflation.

Behind the scenes councils have suffered a big hit from the closure of sporting centres, with millions of dollars in revenue lost. They are also seeing increased costs in delivering essential services like maternal health and dealing with rubbish.

The losses have not been offset by savings in maintenance and staff cuts, prompting local governments to warn the state government that financial assistance or rate rises would be necessary.

STATE GOVERNMENT CONSIDERING SUPPORT MEASURES

Local Government Minister Adem Somyurek said the situation was being monitored.

“The government is considering further measures to support workers and their families, businesses and industries and will have more to say in due course,” he said.

“We’re working with councils on the implications coronavirus is having on their operations including their staff, elections, and their compliance with the Act.”

Local Government Minister Adem Somyurek says the government is working with councils. Picture: AAP/James Ross

Municipal Association of Victoria president Coral Ross warned local governments may need to cut costs to make up for lost revenue.

“A range of council-run facilities, including libraries, sport and recreation centres, galleries and performing arts centres, have been closed in accordance with the Chief Health Officer’s direction, resulting in a sudden loss of income for councils,” she said.

Ms Ross said councils could not raise revenue as effectively as state and federal governments and that “rate capping limits Victorian councils’ ability to raise funds to cover increased costs or loss of income”.

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But Opposition local government spokesman Tim Smith said many families and small businesses would simply be unable to pay their rates.

Public backlash this week forced Manningham councillors to defer until December a vote on a State Government-approved pay rise of $5000 for themselves and $20,000 for the Mayor.

ONLY ONE CEO TAKES PAY CUT

Of the councils surveyed, only Whittlesea’s acting chief executive Joe Carbone was taking a pay cut – a 20 per cent reduction from March.

The northern suburbs council is currently controlled by administrators and does not have elected councillors.

Port Phillip Mayor Bernadene Voss said their chief executive was not considering taking a pay cut but would continue donating a proportion of his salary to charity.

Some other councillors across the state have opted to donate their wages to local causes but most remain unchanged.

Maroondah Mayor Mike Symon says councils are set to lose millions in revenue.

Port Phillip Council this week announced it was expecting to suffer a $40 million budget shortfall as a result of the pandemic.

Darebin Council will shelve $20 million in capital works programs as it tries to make up for the coronavirus shortfall.

The council is projecting a loss of $15 million of revenue.

Maroondah Mayor Mike Symon said the council estimated a loss of $10 million in income to June 30, with a similar loss for the next financial year if current restrictions remain until this September.

He said the council continued to provide vital services such as Maternal & Child Health and Meals on Wheels, along with maintenance of public parks and buildings.

“While we are continuing to provide these essential services for the community, we will also be doing what we can to assist people who are experiencing financial strain,” Cr Symon said.

Knox Mayor Nicole Seymour said it was difficult to estimate the financial impact of COVID-19 while the situation was still evolving, however it could be up to $10 million when taking into account loss of revenue and interest and increased operational costs.

Knox Council Mayor Nicole Seymour says the council will not delay any community infrastructure projects despite being impacted by COVID-19.

Cr Seymour said the council’s proposed budget invests $113.9 million in construction and improvement of community infrastructure.

“After much consideration, no projects have been delayed as we believe this will play a crucial role in stimulating the local economy,” Cr Seymour said.

“Further, no staff have been stood down as we have opted for redeployment where required.

“Rates are proposed to increase 2 per cent to deliver these projects, fund a further $3 million in relief and recovery measures and continue delivering services.”

She said the council had updated its Payment Assistance Policy to broaden arrangements for households and businesses experiencing financial hardship.

COUNCILLOR TAKES PAY CUT, URGES OTHERS TO FOLLOW

Port Phillip councillor Marcus Pearl will take a 50 per cent cut and donate the other half of his wage to sporting and community groups for the next five months and is urging other councillors to do the same.

“Leaders go first, and all councillors should consider reducing their allowances at this time to help our community,” he said.

So far no other Port Phillip councillors or senior staff have opted to take a cut.

FINANCIAL HARDSHIP POLICIES OFFER RELIEF

To provide some relief for residents councils such as Greater Dandenong, Monash, Whitehorse, Kingston, Port Phillip, Stonnington, Moonee Valley and Cardinia have expanded their financial hardship policies for ratepayers and introduced relief packages for businesses, sports clubs and community groups.

Kingston Mayor Georgina Oxley said so far about 200 struggling ratepayers in the southeastern region had been granted an interest-free deferral of rates to June 2021, and Whittlesea said they would consider this measure for people experiencing extreme hardship.

Kingston Mayor Georgina Oxley said the council had introduced a $2.8 million assistance package, and struggling ratepayers and businesses could apply to defer their rates.

Some councils – including Maroondah, Manningham, Port Phillip, Knox, Greater Dandenong and Maribyrnong – will not charge interest on outstanding rates to June 30, 2020.

Boroondara will do the same for unpaid rates to December this year.

Stonnington Council spokesman Jim Carden said rates were a major source of revenue to fund critical services such as waste collection, health and environmental services and open space maintenance.

When asked whether Stonnington’s chief executive, mayor or councillors would take a pay cut, Mr Carden said “the business of council and councillors themselves has increased significantly over this time” to implement relief plans and continue to deliver critical services.

Brimbank, Darebin, Glen Eira, Hobson’s Bay and Moreland did not respond to Leader’s questions before deadline.

Frankston and Yarra Ranges declined to comment.