By Dean Hurlston, Ratepayers Victoria, Inc.
It is well established that Council CEOs move around the industry to advance their careers.
The vast majority of Large Council CEOs come from smaller Councils or roles within the local government sector. A review of CEO profiles on LinkedIn shows just how mobile Council Executive staff and CEOs are. They are always on the lookout for larger roles and larger pay packets.
Across Victoria there is an immeasurable talent pool from Private industry , but you will rarely, if ever, see any of the Private sector talent running our 79 Councils.
Local Councils do not have a definition in law that constrains them to rubbish, roads and rates which is what most people expect Councils to deliver on.
The Local Government Sector is awash with CEO’s and Executive staff that are in it for one reason and one reason only – to resume build, and they don’t want competition from the private sector.
When the Local Government Act was updated in 2020, the CEOs and their union (The MAV) took absolute exception to the Minister at the time (Adem Somyurek) inviting ratepayer organisations to make suggestions on what needed to be changed.
It was no accident, but it was a defining moment.
For me, it was the start of a study of the Local Government Sector and why CEO’s did not want the end user, consumers (residents and ratepayers) being anywhere near the legislative changes.
Many good suggestions made it into the original draft legislation, only to be removed by intense lobbying by the MAV and Council CEOs. Some of the changes sought to address the power imbalance the public has when dealing with the CEO and executive staff.
When power does not want to be accountable and is fastidious in lobbying against any resident and ratepayer protections, you know there is cartel behaviour behind it.
So what is this cartel?
Quite simply CEOs preside over budgets of hundreds of millions of dollars. They also have very high delegated spending limits (some as high as $2M). These delegations mean the CEO can spend this money without ANY accountability. Only if a spend goes over do they need Councillor permission.
There is a long established pattern in Councils (uncovered by the Victorian Auditor General VAGO, and the Ombudsman) of getting around delegated authority limits by breaking spends into smaller amounts to avoid scrutiny. This has been raised for many years by VAGO as a corruption risk, yet still nothing changes.
Further to this, CEOs use Council projects as the money makers to progress their own careers. These projects have slim, rhetoric-based business cases, if at all. They also use large swathes of ratepayers’ money or enormous amounts of borrowings. Either way, it is long known amongst the CEO group that the way to grow your career is to “BUILD STUFF”. CEOs often go to councils where there is a significant build pipeline because this is what motivates them.
It is of course these projects that build ones resume and career opportunities.
The boring stuff of council, running an efficient and lean business is absolutely not on the agenda.
Any listed public company director knows that a good CEO is able to do two things – run an efficient and cost-effective business and innovate to drive transformation that better serves its customers or stakeholders. Yet why is this the antithesis of Council CEOs?
Self Interest. If there is one thing all CEOs have learned in the political machinations of Councils, it is of their self-interest. They are not responsible to industry KPI’s, or standards and they can pretty much make anything up as they go. There are horrific stories across the industry of fraud, politicisation, and cost blows outs, but rarely if ever does a CEO get fired. If they find themselves in a position that is untenable, they are easily able to move Councils and leave behind the trail of destruction, for the ratepayers to pay for yet again.
The Council CEO industry is awash with Ego and hubris. They all regularly inform the government and ministers about their views of what needs to happen in the industry and so far we have a government hell bent on protecting the CEO culture instead of holding them accountable.
Let’s be clear here, many Council CEOs wouldn’t last a month in the private sector, accountable to a real board of directors. They don’t have the business acumen to run a lean and efficient organisation.
On the topic of building, we have seen so many communities oppose large projects and offer alternative cheaper models over the years. Every time they have been outmanoeuvred and outsmarted by CEOs and executive groups who have access to top lawyers, top experts and advisors who will do and say anything to defeat well-meaning residents and ratepayers.
This is the dilemma of Councils. A corporation, run by CEOs who do not have to answer Councillors questions, who keep councillors stage managed with only the information they want to share.
CEOs who have unfettered power. CEOs who can hide community grant recipients connected to Councillors. CEOs who can command internal reviews when things go wrong, but nothing changes. CEOs who buy luxury cars to keep mayors happy. CEOs who know that ultimately, they run this show and they call the shots. CEOs who know that building large projects keeps councillors happy too. These projects help their favourite councillors get elected and re-elected. CEOs who know that they can do things politically for Councillors that will keep them in a job. CEOs who can sit on boards and regularly be keynote speakers in businesses that profit from the sector.
CEOs who wouldn’t dare go to the public sector because that would be an impossible transition.
CEOs who know the sector doesn’t hire from outside, so they are always a protected species.
So next time you drive past a Council project worth tens of millions of ratepayer dollars, whether it be a pool, an indoor stadium, a multi-level carpark, a retail precinct, or a new Town Hall, just remember that this is the legacy of Council CEOs. Their only purpose. To build stuff for their resume and continue to grow the ever-ballooning number of staff at their beck and call.
While they are at it, they command salaries of $300,000 - 700,000 per annum. More than our highest paid state politicians, yet the CEOs are not elected and control $12 billion our money every year.
A Cartel, you bet!
