I am extremely concerned about the interim General Manager’s (Rik Hart) recent comment regarding the repayment of the misappropriated reserve funds. (Chronicle p5 Dec 16)
He said: “This money has to be repaid but Council can take its time repaying it and it will pay no interest on it in the meantime”.
This is an untenable position and is contrary to all accounting and financial principles.
The restoration of the reserve funds that were used illegally or without authority need to include interest that would otherwise be earned if they had not been misappropriated.
Failure to recognise interest on these misappropriated funds means that there will be future shortfalls in the infrastructure funding, as the interest earned is to ensure that funds grow to compensate for inflation and the other cost increases in the infrastructure items in development contributions plans and development servicing plans.
The failure to apply interest to the outstanding misappropriated funds will also encourage future managers within Council to indefinitely postpone repayments and use money that would otherwise be committed for such ends for other purposes or investments.
As unpalatable as it may be, the failure to account for interest on the misappropriated funds is just obscuring the true cost of the financial mismanagement that has been perpetrated on the residents and ratepayers of the Central Coast.
I have no doubt that the Department of Local Government would not endorse the use of reserve funds as a source of interest-free loans.
Email, Dec 17
David Kitson, Budgewoi community representative on Local Planning Panel