$70M shortfall for essential services

Four Director positions and their departments have been cut from Central Coast Council as part of cost-cutting, but Administrator, Dick Persson, says an extra $70M a year is needed to continue delivering the essential services of roads, rates and rubbish at current levels.

The Administrator presented his three-month progress report at Council’s meeting on Wednesday, February 3.

The meeting started late as Persson spent about half an hour speaking to protesters who gathered outside the Gosford chambers and were filmed by a television crew chanting “No rate rise”.

He asked how many of them realised that with the rate harmonisation process, former Wyong residents would pay on average $3 a week less.

Some of the protesters said they did not know that.

Persson acknowledged the challenge in communicating to the community the need for a rate rise.

“I can’t get the message to the community strong enough – this is dire,” he said.

Persson said he was happy to talk to residents but warned: “If you come to me with alternatives, we won’t talk if you haven’t read my report.”

The report says that cutting costs would deliver about 70 percent of the $70M per year shortfall needed for essential services while a rate rise would deliver the rest – if the Independent Pricing and Regularity Tribunal (IPART) agreed to grant one.

Persson said that other services such as libraries, pool hours and sporting field maintenance would be cut back if the proposed rate rise did not get IPART approval.

Council wants a rate rise of 15 percent and its second choice is a 10 percent increase.

The deadline for Council’s submission to IPART was Monday, February 8 and the Council voted on Wednesday February 8 to sent the recommendation to IPART for the 15 per cent increase.

“This need for a rate rise has come out of left field and IPART is aware of that and is being accommodating,” he said.

Meanwhile, the work of reducing the number of staff at Council continues and Persson said Council was meeting its redundancy target.

Four directors and their directorates – Governance; Innovation and Futures; People and Culture; and Information Management and Technology – have been cut.

The number of senior staff has reduced from nine to five and the business areas that fell under these directorates have been moved elsewhere within the organisation.

The governance director’s position was vacant, as was the IT position, and the director of Innovation and Futures has left.

The Human Resources department has been incorporated into Corporate Services and the Internal Ombudsman is no longer on the executive leadership team.

Also, the next line of managers has been cut from 39 to 26.

These positions will go as staff leave the organisation over the coming months.

“People are willing to go,” Persson said.

The capital works program for this financial year had been cut from $240M to $170M.

Persson said the current shortfall of $70M every year was not sustainable and banks wanted evidence of a plan to reduce costs.

“Mr Hart and I had to be at our persuasive best to stop another major bank calling in a $104M loan,” he said.

“Mr Hart and I have explored all available options for securing a financial turnaround.

“We strongly support an approach which focuses mainly on reducing costs (70 percent) but also includes a proportion of the necessary funds coming from increased revenue (30 percent).”

At the meeting Mr Persson said he, CEO Rik Hart and chief operating officer, Malcom Ryan, had between them more than 100 years of experience.

“We are of the view we cannot cut any deeper,” he said.

Persson said the team was writing budgets that would see an accumulated surplus of about $113M by the end of 10 years and that surplus would go towards paying down the Council debt, but that would not allow Council to start any new projects.

The debt stands at $565M even with the loans of $150M that the Council under the Administrator signed up for late last year.

Those loans were factored into the $565M as was $45M to pay for staff redundancies.

The $565M debt includes $317M debt that the amalgamated council started life with, back in 2016 when the former Wyong and Gosford councils were merged and was made public in the Administrator’s 30 day report which he urged people to read in conjunction with his latest report.

He said that soon the community would be able to monitor in real time, on Council’s website, how each of the five directorates are tracking in real time to their budgets versus actual spending.

Persson said the most important thing now was to get a new CEO as soon as possible.

He said if the Minister for Local Government decided for the councillors to come back after this second period of three-month suspension, he would recommend the acting CEO Rik Hart be appointed financial controller.

He would have the power to override the councillors on all financial matters.

The Administrator’s three-monthly report is available on Council’s website.

Merilyn Vale