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Untrained amateurs running million-dollar budgets
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07/10/2018 - 12:13 pm
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They oversee annual budgets of millions of dollars, make decisions that have profound influence on the lives of hundreds of people, pursue policies that could have devastating effects on the value of your investments and most do it with zero training in any of the significant skills required for a modicum of certainty or authority.

I’m talking about strata committees, as they’re known in NSW and Victoria and executive committees in Queensland and the ACT, and other names in other states.

With millions of dollars at stake, surely they get professional help? In fact, about half of the strata schemes in NSW – mostly the smaller, older buildings – don’t have a strata manager, and the proportion may be even higher elsewhere.

The UNSW’s recently released strata data report said there were 316,000 strata schemes in Australia and only about 4,300 professional strata managers – that’s about 75 schemes per strata manager – so you have to wonder who’s running the show and on what basis.

That’s not to say having a strata manager is a guarantee of good management. They vary greatly in their competence and committee members can still operate based on a mixture of ignorance, “common sense”, mutual self-interest and the odd prejudice.

Even the most diligent strata managers will be tempted to pull their heads in when their clients make it clear that they don’t want to hear anything that prevents them from doing as they please.

But these are extremes. The big concern is the well-intentioned committee members bumbling along and getting things mostly right … until they get something spectacularly wrong.

That could range from allowing the time limit for defect claims to evaporate in new buildings or allowing an owner to ride roughshod over their by-laws just by force of their personality, threats of legal action and demanding ‘rights’ that simply don’t exist.

In the 15 or so years that Flat Chat has been going, complaints about strata bullies dominating weak or ill-informed committees have been legion.

But committee members are volunteers, and they’d need to know they were on solid ground if they were expected to suffer the inevitable backlash from an entitled owner who wasn’t getting his or her way.

It’s that knowledge gap that’s the worry and with the increasing number of strata residents around the country, it’s growing.

The strata managers’ professional body Strata Community Australia (SCA) used to have an excellent online committee members’ training program in NSW. But that disappeared when the new laws came in in 2016.

Instead, the SCA, individual strata management companies and owners’ organisations like the Owners Corporation Network as well as City of Sydney Council run seminars for strata residents.

However, these tend to be highly focussed on specific issues – like pets, parking, noise and defects – and rarely if ever address the basics of how to run an efficient committee.

So what do we do to bridge the knowledge gap? Should there be compulsory training for committee members?  That won’t work because it’s hard enough to get people to give up their time just to attend meetings, let alone evening classes.

Perhaps office-bearers should have a year to get some sort of certificate before they can seek re-election.  Or committee members should be paid a modest amount, but only if they have been through a course.

Or maybe governments don’t want strata owners to get too savvy. Knowledge is power, as is a strong collective voice.

My inner conspiracy theorist whispers their worry might be that as we get with the program, we might take a long hard look at who caused the problems in the first place.

When you think about it, there is no compulsory training for parents (because we are all so good at it), or basic health, hygiene or even diet. There are generations of young people in Australia who have no idea how to use a kitchen stove, regardless of the aspirational brainwashing of MasterChef and My Kitchen Rules.

Between balcony barbecues and UberEats, why would anyone  learn how to chop an onion or steam broccolini?

So it’s safe to say compulsory training for strata committees is way down the priority scale for governments. On the other hand, if you go out and find it for yourself, think what that does for your knowledge – and power – in your building.

A version of this column first appeared in the Australian Financial Review 

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08/10/2018 - 9:58 pm
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Well said Jimmy.
At the very least every strata committee should make sure they have access to a copy of the Act & Regulations governing their state for reference and take some interest in learning what they can and can’t do. Not all strata managers give the correct advice or guidance which results in mismanagement.
Having a strata manager is no guarantee things will go well, or proper guidance will be provided, if “the committee” have a mind of their own, don’t document most of their actions and do not bother to understand the “rules”.
I obtained a SM license after finding the committee had been following their own agenda for 9 years and, apart from AGM , all meetings had been informal with no notices or minutes. The Capital works fund (sinking fund) had been budgeted , and used, annually for cosmetic “wants” resulting in an almost minus balance for essentials works. The push for low levies can have fatal flaws.
Our 10 year old building has long standing water ingress problems which have been repeatedly cheaply patched and now need a very expensive rectification. Special levy have now been imposed on those that can least afford it.
BUT, as you point out, getting anyone on the committee in the first place is nigh on impossible. Some work full time, some can’t be bothered and others only want to whinge!. The odd compliment and good feedback is a plus.
I agree that compulsory training is not likely to take off but a small incentive for those who bother to train might work?
Always follow your articles and column BUT the crazy computer generted passwords are a real obstacle for us “older folks” and being able to make up our own passwords with given criteria would result in more people remaing active on the forums! Saving obscure passwords is not easy.
Keep up the good work.

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10/10/2018 - 8:02 am
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A group of owners in our Strata discovered the incompetence and one-person 7-8 year dictatorial  rule in our Strata too late when AF & CWF went into deficit. Yes, this person is very accomplished, knowledgeable, knows more about Strata law than the Strata Manager.

See where our Strata landed with so much knowledge ! Knowledge is not the solution for Strata woes. SC Members do voluntary work and they know it is unpaid work. Payment does not by itself attract good volunteers. What is important is sincerity and honesty in work, not interfering with SM’s or BM’s work ( in allowing BM to appoint contractors for various works, unless proven to be dishonest or incompetent ) and most importantly setting an example in simple ways.

Strata Committee must know the BM, the security guards and the cleaners ( last two on minimum wages, mostly ) are the eyes and ears of the building 24/7 and if they feel you are taking care of them in any way you can, Strata will be safe to live in, defects are discovered before they become a budget-busting headaches, living environment improves.

Begin improving conditions in the garbage rooms where the cleaners work : by painting all surfaces once every 5 years, chutes twice a year including fragrance mats in each garbage room on each floor, take interest in how they work, talk to them about their problems at work and how residents can improve their work conditions ( not throwing glass down the chute, not throwing newspapers, card boards down the chute that increases their work and often injures them ).

Also engage them for simple works that don’t need specialist skills to supplement their income so long as the work is better than before and payment lower than before. After 4 years of untrained SC Members , everything in our Strata improved : finances, happiness of owners / residents / cleaners / security guards and even contractors as their bills are paid without much follow up.

So training of SC Members is not the only solution without other things as stated above. 

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