Last night Council received a new budget model and supporting budget formula.
It sounds simple in the telling.
The budget formula that our management team will use to develop the budget for Council’s consideration has three components:
- Cost of living e.g. increases in fuel costs
- Growth e.g. the need to add a new waste collection route or maintain a new park
- Investment e.g. investing in an energy management business case to save money
There is an important conversation to be had in each of these three areas.
Cost of living – what is the most relevant index to use?
Growth – does new assessment cover all costs of growth and if not, why not? This is an issue that successive Council’s have wanted to pursue.
Investment – what is the business case model to evaluate a proposed investment?
The budget formula will evolve through these conversations but with this starting point we are bringing greater transparency and predictability to the budget process.
It is my opinion that Council should not be approving this budget formula because we are not responsible for developing the draft budget – that is the job of management. We should be consulted on the development of the budget formula that will be used – we have been consulted and will continue to be. Council is accountable for approving the final budget on behalf of our residents and businesses.
Also last night, Council made another step to decouple operational reviews (i.e. what services we deliver, what levels of service we provide and how efficient is our service delivery) from the budget process. Attempts to make decisions like this on budget night always run the risk of costing the taxpayer and the community more in the long run and are less transparent because we have no engagement of the community in key decisions.
Decoupled, operational reviews can and should inform the development of the budget.
Four new value-for-money audits were added to the 2013 Internal Audit Work Plan last night. These are tied, in part, to the efficiency target that Council has established for 2013. Another example of how the new internal audit function continues to bring value to the way we do business.