The period of 16 months was not long enough to bed down the amalgamation of the former Wyong and Gosford Councils, said Central Coast Council’s first Administrator Ian Reynolds in his submission to the Public Inquiry.
He said all NSW councils were given the same time period but it was not long enough for the Central Coast given the complexity of issues involved in merging the two entities.
He said more funding “would have been desirable” given the complexity, saying funding was also set at a standard level for all merged councils.
All councils received $10M for the costs of merging.
Reynolds’ comments were in a two-page submission to the office of Commissioner Roslyn McCulloch who is running the Public Inquiry into the Council.
Another submission by the current Administrator, Rik Hart, made many of the same points and warned that many more councils could end up under administration as a result of financial difficulties.
Reynold made five concise points on one page and included a covering letter in which he said he hoped his observations would assist the Commissioner in her deliberations.
In his third observation, Reynolds said it was his view that the employment protections of no forced redundancies provided tactical assistance to the new Council by allaying concerns regarding job security, but “mitigated against the potential to capture strategic advantages from the merger such as achieving structural efficiencies”.
On the financial status of the former Gosford Council, he said it became apparent that its financial status was not clear at the commencement of the Administration period.
“Establishing that position entailed considerable resourcing by the merged Council,” he said.
“In my view, the need to allocate resources to determining and addressing that situation, over and above the challenge of consolidating the new entity, was unfortunate.”
Reynolds also suggested an “End State” report to the State Government was needed.
“In my view, it would potentially be of use to Government to require an ‘End State’ report in relation to a merged Council to assist the Government in managing the transfer to an elected Council and any residual issues arising from the merger.”
The current Administrator Rik Hart’s submission questioned the depth of State Government’s “fit for the future” reporting that was used to decide which councils should merge and he too criticised the State Government’s funding.
“Several NSW Government decisions as part of the merger policy for Councils, has been a hindrance to their success, both in a financial and governance sense,” Hart said.
“For example, ‘protecting’ non-contract employment for three years has had the effect of denying the types of savings that most merged organisations achieve.
“Councils were also restricted for three years in applying rate harmonisation resulting in Central Coast Council maintaining two separate IT systems.
“There was also a total misunderstanding of the requirements for councils to merge successfully through limited funding provided to councils to merge.
“Central Coast Council received only $10M despite an external expectation of over $60M.”
Hart went on to outline broader issues.
“Central Coast Council’s financial crisis has clearly identified a system in need of change,” he said.
“The Public Inquiry presents an opportunity to look at the system as a whole and ask the question if the frameworks and legislation in place continue to serve their purpose.
“It appears to be a very ‘old world’ NSW councils operate in when compared to other states.
“I acknowledge this is out of scope of the Terms of Reference for the Public Inquiry however what has occurred here at Central Coast Council only highlights the underlying issues that led to a dysfunctional operation.”
He said these issues included the local government model not current; financial model is broken; application of legislation at odds between state government agencies and ineffective dialogue between state and local government on the needs of local government operations and how to best financially support those.
He said the Office of Local Government recommendation that local councils no longer have to report on their unrestricted cash position could result in more councils breaching their use of both internally and externally restricted funds.
“In my opinion, it would be sensible for all councils to report on a quarterly basis on their unrestricted and internally and externally restricted funds and that the Auditor General, as part of their audit of councils, in the future audit the balance of those funds at year end,” he said.
“In summarising, if the broader items mentioned above are not addressed there is the likelihood of more councils going down the pathway of administration (as a result of financial difficulties).”