Friday, September 21, 2012

$14 million request by Murrindindi Shire. What for?

Early this week the Murrindindi Shire Council issued a Press Release relating to its lobbying for a $14 million support payment from the Victorian State Government.

You can read the full Press Release here, but in essence the Shire is suggesting that due to large costs relating to ongoing maintenance and upkeep of assets constructed after the Black Saturday fires ($18.7 million over the next 10 years, apparently) that it needs a significant of financial assistance. It is using a report prepared by KPMG, as the main part of its justification to do so.

What crap.

There are many ways that the thinking and subsequent action here is flawed. And whilst not looking to attack or denigrate any individuals, I think there are some problems with the report and the way the information was released.

I'll start with a small point.

The front page of the report indicates that KPMG prepared this in February 2012. In my brief review of Council minutes online I can only find a mention of it in a Council Briefing on 6th August. And then the Press Release this week (17th September).

Now most of us understand how slow the wheels can grind at Government level. But what seems to have escaped the Council's notice is that the report is based on information that is old, and requires significant updates. In my opinion these updates would significantly change the recommendations.

As an example ...

The Kinglake Community and Cultural Facility (KCCF)
The KPMG report states that there has been $33 million in assets have been built post-bushfires, with the largest component of this being "Buildings" at $19.9 million. This includes $5.3 million relating to the KCCF (at the time of the report, not due for completion until sometime towards the end of 2013). This was all well and good in February 2012, when the report was prepared, but on the 23rd April Council resolved to withdraw from the project. Yet over 5 months later they continue to use this report, including the KCCF, to ask for more money.  Shouldn't the report have been updated with such a significant change?

Existing Infrastructure
How much of the infrastructure in the list of "VBRRA contributed assets" per the the KPMG report was actually infrastructure that had existed pre-fires that have been rebuilt? I don't know the full answer to that question but I know that there are at least some. Wasn't there a Hazeldene Bridge before the fires? Wasn't Gallipoli Park in existence before the fires? OK, these additions and rebuilds are improvements on the originals, but wouldn't there have been maintenance and insurance on these anyway? Is Council seeking to reclassify these "upkeep" expenses as new expenditure? Creative accounting? KPMG have apparently made some allowance for this (Page 4 of the report), but they are based on assumptions that are a year old.

Income Generation
I can identify at least two "new" assets where there is rental income that is, or will be, generated. Both the Kinglake Rebuilding Advisory Centre (the RAC) and the Kinglake Medical Suites (under construction) have or will have rent paying tenants. There are probably more buildings where this is the case in the list but these are the two most obvious examples. I cannot see anywhere in the KPMG review that refers to rental income being used to offset any of the maintenance and replacement costs of the buildings.

What I Reckon.
1) Redo the figures. Use current information. Include the income being generated as well. The Council loses (more) credibility using an incomplete report that has out of date information that it's been sitting on for over half a year.

2) Release the results in a timely manner to the rate payers.

3) Have an honest discussion with the rate payers. Ensure you include these points:
  • These assets improve our communities, not only for us now, but for our kids and grand kids. We should be proud of them, not hold them in contempt.
  • These assets were, in the main, requested by the communities.
  • There are costs associated with these keeping these assets.
4) Be real about the manner in which these costs are going to be paid for. Rate increases need to be part of this (stop trying to pretend they wont be).

I could go on and on about this. But I wont.

Over to you. What do you think?

Tuesday, May 8, 2012

The Stantons 2012/13 Budget Analysis

Well, Wayne Swan, with his blue polka dotted tie, has delivered his budget speech for the forthcoming year.

Let's not spend too much time on the headline surplus rate of $1.5 billion. This is essentially a meaningless number, created more for political effect than for any sound economic reasons. In addition, GWS has more chance of winning the AFL premiership this year than the government has of getting a $1.5 billion surplus by the end of June 2013 (and that would also be the case if Joe Hockey was standing in Wayne Swan's place).

Here are the parts of the budget that I believe will have the most impact on our clients:

Individuals and Families:
  • Labor had previously announced a "standard" rate of work related expenses so that taxpayers could reduce their dependence on tax agents and accountants when completing their income tax returns. This has now been scrapped. The idea was flawed when it was announced, and it has been fought off successfully by the tax and accounting professions.
  • The 50% tax discount to apply to interest income has been scrapped (to save money)(ironically).
  • Means testing of the medical expense tax offset (what was wrong with using the word rebate, instead of tax offset?)
  • The Mature Age Tax Offset is to be phased out for people born before 01/07/1957. This was bought in originally to encourage "older" people to continue in the workforce. Not important now?
  • The exemption for the temporary flood and cyclone levy will be extended to those receiving disaster recovery payments in 2010/2011, as well as though impacted by natural disasters in 2011/12. The parochial part of me is asking why this couldn't be extended back to those impacted by natural disasters in 2008/09 to exclude those impacted by Black Saturday.
  • The replacement of the education expenses tax offset with a new School kids bonus. Accountants around the country will be cheering at this news. Ensuring that taxpayers had the necessary information and receipts to claim this tax offset was always a challenge at tax time.
  • Family Tax Benefit increases by up to $600, but ceases for those with kids over 18 (or 19 if they are still at High School)
  • As previously announced, as part of the compensation for the Carbon Tax a significant change in the tax rates, including an increase in the tax free threshhold to$18,200, as well as an increase in various Centrelink payments.

  • The proposed lowering of the company tax rate by 1% has been scrapped. This is actually due to the reality that this wasn't able to be passed through parliament. In all honesty, 1% is not the be all and all end all for companies.
  • Companies will be allowed to carry back losses made in current years to apply against previous profits, thereby refunding taxes previously paid. This is not a bad proposal, as it will help out a lot of the small, struggling companies now. No mention as to how this helps those businesses set up in other structures like family and unit trusts.
  • The current superannuation contributions caps will remain in place until at least 2014.
  • Whilst not a new announcement, small business will be eligible for an immediate $5,000 write off of new equipment purchases, as well as changes to motor vehicle depreciation claims from 1st July 2012.

The Tax Office:
  • Additional funding for GST compliance measures. The funding is $195 million over the next two years and is looking to raise additional GST of $986 million as a result. This is a big red flag to any business currently registered for GST.
  • Additional funding of $106 million to help the tax office manage tax debt. This is another red flag for any business that currently owes money to the tax office. The tax office are about to crank up the pressure another notch or two. Great if you are already struggling to keep up with all your commitments.
  • $300+ million to the tax office buys a lot of resources. You won't see this in the headlines on the papers or the ABC, but the tax office have effectively been given the green light to "go after" businesses. This is not good news. I hope you all have tax audit insurance (call me if you don't).


  • Yes, the carbon tax hits 1st July this year.
  • The National Disability Insurance Scheme has been funded to the tune of $1 billion over the next 4 years.
  • Over 4,000 public service jobs to go, with cuts to a lot of important government departments and services, including the Bureau of Meteorology, Regional Australia, Bureau of Statistics, and Local Government. Some people will cheer at the cuts to the public service, but those same people will more than likely moan at the reduced services they will provide as a result.
  • The superannuation guarantee will steadily increase from 9% to 12% over the next few years.

  • Our local Federal member, Rob Mitchell, tweeted that the budget will provide "...200K for Development of e-Health Capacity at the new Kinglake Ranges Health Centre..." Rob, I'm sorry, but I have no idea what this means. I'm pretty certain you'll read this. Can you please elaborate and explain what this actually means.

My Reaction:

As mentioned at the outset, the headline surplus amount of $1.5 billion is more about politics than it is about economics. My concern is that whilst there are noises from the Treasurer that there are problems in the economy, why deliver a budget that seeks to exacerbate this? And I'm not talking about the carbon tax. That's old news. If you sack 4,000 public servants that increases unemployment. If you cut budgets in all departments that has a knock on effect reducing demand throughout the economy. If you let the tax office clamp down on outstanding debts, that will cause businesses to fold. In my opinion this is not the right budget and this is not the right outlook for this time, in this economic climate.

The difficulty we have at the moment is that we have Government that has painted itself in a corner with its previous commitment to deliver a budget surplus this year. And rather than admit that it was wrong to do so, and goaded by an Opposition that has no economic credibility of  (when will they replace Hockey and Robb with people with at least some understanding of finance and economics), and an essentially clueless gaggle of political and economic media commentators, they have proudly revealed this small surplus. Bravo.

But for what benefit? Financial markets dont give a toss as to what the headline rate is (they, as a collective, are not that superficial). Our debt is at very manageable levels, especially when compared to just about all other OECD countries. Our government's (Federal, State and Local) primary concern should not be about debt management, it should be about growth, or the lack of it. Cutting budgets, and jobs, is not the answer. It never has been.

Would the Liberal party have produced a different result? I seriously doubt. Anybody watching Joe Hockey on the ABC tonight would have been left in no doubt that there is a large credibility gap in the future alternative government's ability to manage anything bigger than the local chook raffle.

So what do you think?

Tuesday, March 20, 2012

Artz and Kultcha - Music (1)

The discussion and debate that can best be summarised as Arts v Sports is one that pops up every now and then. Locally, this debate has come about as a result of the interest of the possible future development of a public swimming pool in Kinglake. Concurrently a joint initiative between Parks Victoria, Kinglake Ranges Foundation and our local shire has seen plans made for the construction of the Kinglake Ranges Community and Cultural Facility (isn't that a sexy title).

Now before I start, I need to declare that I am a board member of the Kinglake Ranges Foundation and I have a personal interest in seeing the development of the KRCCF (the equally sexy acronym for the Kinglake Ranges Community and Cultural Facility) come to fruition.

This blog is, however, not about arguing for one building over another (a local pool would be good). Rather it's to explore the more general concept of why the development of "The Arts" would be beneficial for the Kinglake Ranges.

First of all, what do I mean by "The Arts"? As with most definitions I turn to the useful website that is Wikipedia. They define arts as:
  "... a vast subdivision of culture, composed of many creative endeavors and disciplines. The arts encompass visual arts, literary arts and the performing arts."
So, we are talking about:
  • Visual Arts: includes drawing, painting, sculpting, ceramics and photography
  • Literary Arts: includes basically writing about stuff 
  • Performing Arts: includes music, theatre, dance and film 
For the purposes of this blog, I am going to focus in on Performing Arts and specifically music, although most of my views are equally appropriate in all areas of The Arts.

Locally, most people will probably know me, not for any artistic endeavours, but either as a result of my work as an accountant or in some of the community groups that I have been involved in over the years. Most of my networks and friends developed off  "the ranges" are, however, as a result of musical activities.

Music has been a part of my life from an early age. Initially with keyboard and piano lessons I was singing in a choir until high school. In Year 8 I was forced by my parents to join the High School's brass band, and it is one of the few enforced "choices" I had to make that I have not regretted. For well over 25 years I have enjoyed playing brass instruments, including trombone, tuba, euphonium, baritone, and more recently the humble tenor horn.

More recently, since the fires I have taken up the challenge of music composition, for brass instruments, with renewed appreciation of why I enjoy the art of music.

Music is universal. All cultures around our planet utilise and enjoy music in some way, shape or form.

Music can be an inexpensive past time. Yes, instruments can potentially cost a lot of money, but to sing, hum, whistle or drum a beat is free.

Music can be a social art. Either playing music with people or for other people can be a great way to meet and interact with other people.

But most of all, music is expressive. Music can convey thoughts and emotions better than any other medium (when done well).

I'll be posting more blogs about the benefits of music, and The Arts, to our area over coming weeks, but for now, I'd like to leave you with something that has been doing to rounds of Facebook in the last couple of weeks. The development of musical skills and music appreciation is best started early on in life. The following provides a really good answer to the question : Why teach music?

Thursday, February 9, 2012

A New Home for Stantons

It was Sunday morning on 8th February 2009 when we evacuated the Kinglake Ranges for the suburbs following Black Saturday.

We were first able to return on Wednesday 11th February 2009. Whilst our home was OK, I had heard that my office, near the centre of town had been destroyed. This was what I found :

I mention this, because, 3 years after this event our business will have finally moved into new (hopefully) permanent premises.

In the interim we have had a couple of different office set ups. For the first 10 months after the fires I had my business operating from my employees' various spare bedrooms. Whilst grateful for the ability to resume operating a business this set up was, at best, a workable short term solution.

After discussions between Kinglake Ranges Business Network and the current Assistant Treasurer, Bill Shorten (then the Federal  Parliamentary Secretary for Bushfire Recovery) and with support from both Swinburne University, Salvation Army and others, a large portable building was moved to the Kinglake Ranges and refurbished to make usable as offices. In November 2009 the Kinglake Ranges Business Centre was established and we were all able to move in, together as a team again. We shared these offices with a number of other people whose business premises were also destroyed in the Black Saturday fires.

The third anniversary of this event, together with our imminent move to new premises, has caused some reflection on how the business, and me as a business owner, has dealt with the three years.

There difficulties associated with re-establishing a business, together with assisting the recovery process of the community, whilst keeping a keen eye on the possible development of trauma issues within the family, and personally, cannot be underestimated. And whilst these are issues that are now pretty much taken for granted within the bushfire affected communities, they are probably not well understood elsewhere. For those of you interested in gaining an insight, I strongly suggest viewing Then The Wind Changed, a brilliantly constructed documentary shown on ABC television Tuesday night, based around the community of Strathewen, not far from here.

There are obvious differences between losing your house and losing your business premises in a disaster like a fire, but scratch the surface and some similarities exist.

There is a loss of identity, as something that you have spent years building and developing is gone overnight. As a way of combatting this we created a uniform for our practice; just some tops and shirts with our logo on it so that we could still be identified as belonging to our business. This may seem rather superficial now, but back it was the best I could do to ensure that we reminded ourselves that we were still a team, even though we were operating from 4 different houses at the time.

Every single week I remember another thing that our business had that was burnt in the office. Whether it was client documentation (and there was a lot of that!), some family photos, my educational certificates, the wall prints that I received as gifts over the years, spare clothes that I had thrown in the wardrobe at work, just in case, my collection of toby mugs (though a few did survive the fires) or my lego battleship displayed in my office. Possessions are important only in that they form part of and perhaps explain your identity. And whilst most of these things can, and over time will, be replaced, its still a shit thing that they were destroyed in the first place.

There is dealing with the mundane, but maddening issues of insurances, paperwork, government red tape and other such nonsense. We are fortunate that our the Australian Taxation Office have been very supportive of our circumstance in assisting us and our clients as much as possible. The insurance company was as helpful as they could be. Government red tape is, I think the topic for another post. I think other businesses are still having issues here.

The emotional and psychological issues associated with disaster recovery cannot be prepared for beforehand, cannot be properly explained and will take a while to get over. Counselling helps, to a certain extent. Time helps, too.

The moving into new premises (a 3 bedroom cedar house in Kinglake West) allows us to start a new chapter in our business life, and allows us to develop our business identity. I am looking forward to this next stage.

A few thank yous, to finish off. The Kinglake Ranges Business Network, and Robyn Tymms have provided support in a way and manner that I did not expect and very much appreciate. To my clients that have stuck by me (and we have lost quite a few over the years), thanks for your confidence in us.

To my current team Melissa and Denise and also Murray (part of our extended team), thanks for sticking with me, especially during the darkest times. And thanks heaps to my patient wife, Lesley for her support - even when sometimes it wasnt deserved.

The office should be up and running by Monday. We are now located at 1 Peregrine Drive, Kinglake West. Feel free to pop over and have a coffee, or a chat.