Central Coast Council can’t attract staff, can’t keep staff and can’t get meetings with the State Government. “It’s like nobody wants to know us.”
Local politicians, the media and the community “are attacking the hell out of us”, “like a pack of wolves out there”.
These were the observations of Council Administrator, Rik Hart, when he held a press conference on November 10 to respond to criticisms of the decisions made to get the Council back on a sound financial footing since the financial crisis.
On October 6, 2020, the Council announced it faced immediate and serious liquidity issues.
In November 2020 Hart became acting CEO and since May this year he has been the Administrator.
Hart explained the context that drove the decisions he and Interim Administrator Dick Persson made in the weeks and months after the Minister for Local Government suspended the Councillors on October 30, 2020.
Hart said over the 12 months he had been at Council he had formed the view that the State Government did not fully understand the consequences of its initial decision to request that Council seek commercial loans to support the business.
“Our experience to date is that none of the state government agencies – Independent Pricing and Regulatory Tribunal (IPART), Department of Planning, Industry and Environment (DPIE), Office of Local Government (OLG) and NSW Audit Office had any experience in dealing with a local government entity being effectively placed into receivership and being required to seek commercial loans,” Hart said.
He pointed out the difficulty Council had in dealing with the agencies with no coordination between them and with each of them following their own policy agenda and setting.
He said the Council had been treated like a “piece of carrion sitting there with hyenas pulling them one way and vultures attacking”.
He said the State Government kept them at arms length while the Council had to dance to a commercial bank’s tune to secure two loans totalling $150M.
The banks actually demanded hard assets rather than future cash from rates as surety for the $100M loan the Council secured in late December, 2020 so some community assets were now mortgaged.
Hart said he had tried for three days in December to make contact with the deputy secretary of the Office of Local Government to secure a statement of support from the State Government to give to the commercial bank which was giving the loan.
Eventually he phoned Minister for Planning and Public Spaces, Rob Stokes, and the letter came through at the 11th hour.
“Without the statement of support from the NSW Government we would have had to close the doors of Central Coast Council, it was that dire,” Hart said.
Further attempts to hold an urgent meeting this year with Minister for Customer Service, Victor Dominello, was declined and one with Greg Piper MP postponed.
He said other decisions further complicated Council’s ability to financially recover.
These included the temporary special rate variation (SRV) instead of the requested permanent one.
“This showed little regard to the fact that Council has operational constraints driven by the three major Australian banks that are requiring constant financial reporting, clear historical track record proving the achievement of financial sustainability and the contracted repayment of debt,” Hart said.
He said the local politicians behaved similarly to that of the Councillors by actively campaigning against the proposed recovery plan, particularly the asset sales and SRV application, which indicated their “sheer lack of understanding” of the challenging position Council was placed in.
“Further to the financial crisis, ongoing challenges continually faced by the organisation are rebuilding the reputation of Council which manifests itself with difficulties in retaining and attracting staff,” Hart said.
“For example, in recent weeks we have advertised a number of managerial roles with not a single applicant and those roles have not been able to be filled, creating a further burden on existing staff.”
He said until the Council got a break, it was a sad organisation.
“Potential candidates are concerned about joining the organisation when the imminent threat of impending redundancies is hanging over their head should the current SRV application not be granted,” he said.
Hart said if IPART refuses to allow Council to maintain the current SRV for a further seven years, Council will be placed in a position to go for two separate SRVs in the same year and commence service reductions.
Ongoing challenges included restoring Council’s reputation within the community, and the sentiment of local members of parliament for political purposes.
His remarks came in response to comments by speakers at the recent public hearings held as part of the public inquiry into the Council’s financial position.
Commissioner Rosslyn McCulloch invited all the people who had sent in submissions to send in their responses to evidence heard during the public hearings.
Hart sent in a 14-page report with eight recommendations and another 51 pages of attachments to refute claims made by other speakers.
He called for an independent adjudicator to be appointed where the NSW Audit Office and Council have a conflict of legal opinions and reporting.
“For example, the treatment of restricted cash that led to a qualification and divergence of interpretation of legal opinions between Council and the NSW Audit Office,” Hart said.
One of the reasons for Council’s financial woes was the use of restricted funds for purposes other than they were supposed to be restricted to.
These funds, totalling about $200M, had to be paid back.
Hart said the restricted funds had been repaid and now any surplus cash was being used to pay back the commercial loans.
Issues such as addressing the backlog of infrastructure costs were for the future.
His final recommendation was that consideration be given to there being a percentage of councillors voted in and representative of the community, and up to 20 per cent, or three out of 15 councillors, appointed separately based on qualifications and knowledge.
All 15 would have voting rights.
Merilyn Vale