Central Coast Council has advised the Office of Local Government that it has a serious financial situation and faces an immediate and serious liquidity issue.
Council announced on Tuesday, October 6, that a review of the budget revealed that its position had deteriorated since the March 2020 result.
The deficit reported at that time of $41M, is now expected to increase to $89M.
Minister for Local Government, Shelley Hancock, has instructed the Office of Local Government (OLG) to appoint an independent financial expert and a human resources adviser to ascertain Council’s true financial position and identify options to address the issues as quickly as possible.
OLG has already held discussions with Council’s CEO, Gary Murphy, and senior staff, and will continue to closely monitor the Council to ensure its ongoing sustainability.
The Council’s audited annual financial statements are due to be formally lodged with the OLG by November 30.
The audit will be conducted by the NSW Auditor-General.
Also, it seems that Council might have breached the Local Government Act.
Council says that some expenditure over the past 12 to18 months might have resulted in restricted funds being used contrary to the provisions of the Local Government Act 1993.
This is still under investigation.
CEO, Gary Murphy, ordered the reviews after a previous audit and report did not reveal the issues currently under investigation.
Council was refusing interviews on Tuesday, October 6, after it issued the media announcement.
Council’s finances are the subject of a Notice of Motion (NOM) for the October 12 meeting.
Crs Greg Best, Troy Marquart, Bruce McLachlan and Jilly Pilon called their Motion, “Collapse of Confidence in Council’s Internal Controls and Financial Management”.
The NOM says that Council is concerned by the recent NSW Audit Office report about Council’s “internal controls” over local infrastructure contributions (LICs) where serious concerns were raised around risks associated with Administration of LICs, highlighting that up until June 2019, this Council unlawfully accessed $13.2M for unapproved administration activities.
It says Council’s confidence is significantly eroded in the knowledge that four Chief Financial Officers have resigned or been replaced in the past three years, and that this Council is currently recruiting.
The NOM listed other issues of concern: “the extraordinary waste of millions of dollars through actively terminating binding contracts and willingly paying extensive damages”; Council’s lack of internal controls and transparency resulting in abandoning its $171M Gosford Art Centre; and, an escalating NSW Court List associated with the Council.
It said that Council had an infrastructure spending backlog worth more than $200M.
It questioned Council’s “processes leading up to the extinguishment and refund of a $5M State Government Grant for a Community Walkway” at Winney Bay.
The NOM said staffing levels were now up by some 500 full time employees since the amalgamation with total Council employment being about 2,500 staff plus $9M in Contractors, some being remunerated at $1,300 a day.
It also warned about its recent borrowings and older loans that had an interest rate of 6.25 percent.
It talked about the “extraordinary risks” that Council faced because of its stance on Warnervale airport, where trees need to be trimmed to improve landing angles.
The NOM finishes with a request that Council take a proactive, responsible and self reporting position by requesting the Office of Local Government, the Audit Office and the Minister step in with an appropriate Review Team to identify issues and appoint a temporary independent chief financial officer as Review Oversight.
The matter will be debated at Council’s meeting on Monday, October 12.
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