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The Central Coast Liberals and their affiliated Tell Council social media bovver boys have now labelled the Mega Central Coast Council – the one their former Premier Mike Baird created – a financial basket case and called for ministerial and ‘independent’ intervention, just as a new Chief Financial Officer was to be appointed. Why does this feel like the biggest fix since Fine Cotton?
By Jackie Pearson
Item 6.2 on Central Coast Council’s agenda for its meeting on Monday, 14 October, is typical of the irresponsible, sensationalist diatribe that some councillors have continued to push since elected in September 2017. Its title “Collapse of Confidence in Council’s Internal Controls and Financial Management” reads more like a page-one headline in the Daily Telegraph than an agenda item for a local government meeting. It’s all part of the ongoing campaign to bog down council meetings in mud-slinging, innuendo and lynch-mob thuggery. It is a disgraceful abuse of power by a minority of elected representatives against the majority, put there by the people.
So how did we get to this point and how should we, the people, the rate payers, expect this situation to be resolved in our best interests?
Back to the beginning
When I started working locally in April 2015, I was told by those in the know, including MPs, Mayors and CEOs, that the NSW Government would not force Gosford and Wyong Councils to amalgamate.
Wyong Mayor, Doug Eaton, was in favour of amalgamation. It was an opportunity to become the first Mayor of a regional council with influence in Macquarie Street. His dreams of Chinese theme parks, regional airports and beaches connected by light rail, could, at last, be realised.
The majority of Gosford Councillors were not in favour of amalgamation and resisted, almost to the bitter end, until a visit to the Local Government Minister in early 2016 changed their minds.
Eaton and Wyong Acting CEO Rob Noble (I am not sure if Wyong’s Deputy Mayor Lynne Webster attended) travelled to Sydney with Gosford Mayor Lawrie McKinna, CEO Paul Anderson and Deputy Mayor Craig Doyle.
Doyle told the Gosford Council meeting after the visit that he felt he had no choice other than to vote in favour of amalgamation but called it a shot gun wedding. What carrots and sticks were waved around that day in Sydney? Were there promises that funding would be cut off if Councillors didn’t vote in favour of amalgamation?
It was one of those Catch 22 moments – if they voted for amalgamation, they couldn’t then say they were forced. If they didn’t vote for amalgamation it was going to happen anyway. They wanted to do the right thing, so they caved in.
Amalgamation Day
May 12, 2016 was a stunning local news day. General the Honourable David Hurley AC DSC (Ret’d), Governor of New South Wales, proclaimed the death of 41 existing local councils around the state and declared the birth of 17 much bigger bureaucracies in their place.
Some Councils subsequently challenged the proclamation in court and survived but, with the flick of a pen, Gosford and Wyong Councils ceased to exist and the Central Coast Mega Council was born. The councillors had voted in favour of amalgamation so there was no basis to challenge it.
Gosford and Wyong Councillors were given little time to hand back their phones and swipe cards. Wyong CEO Rob Noble was named Acting CEO of Central Coast Council and Ian Reynolds appointed administrator, reporting directly to the Department of Premier and Cabinet. Gosford CEO Paul Anderson was given a lesser role than Noble but went on leave and resigned shortly after.
Council employees and the public were assured there would be no job losses but Council would be under administration until September 2017. Former Councillors were invited on to an advisory committee that had no real powers. Being part of the committee meant they were gagged from speaking publicly about the amalgamation. The Coast had no elected local government for 16 months.
A lot happened during administration – not all of it good. Highlights included Reynold’s decision to complete the sale, initiated by Eaton, of ecologically-sensitive land at Kangy Angy to Transport NSW as the site of the new intercity train fleet maintenance facility even though better land was available at Warnervale.
The Kangy land was flood-prone and home to the endangered Mahoney Toadlet and other Ecologically Endangered Communities, so the community waged a courageous campaign against the facility but it was hopeless. The community was told other ecologically sensitive land would be acquired by the developer to “offset” the loss of their destroyed bushland. Four years later most of the offsets still haven’t been found or acquired by the NSW Government but the habitat has been lost, forever.
Another highlight was the straightforward audit of the final year of Wyong Council’s books by their usual auditor, Price Waterhouse Coopers. There was a forensic, deep-deep-dive audit of the Gosford City Council books even though both former Councils had met all requirements in the state’s Fit for the Future processes. The auditor refused to sign off the Gosford accounts, imputing unresolved issues.
Independent Councillor Greg Best declared this evidence of his long-held beliefs about Gosford Council being a financial train wreck. When in-depth questions were asked of Rob Noble regarding the exact nature of the problems with Gosford’s books, the response was that he simply did not have the time to provide the in-depth answers.
He said it was time to rule a line under the whole affair and move forward. There was double-counting of drainage covers and road base and insecure software which may or may not have enabled data to be manipulated and that manipulation may or may not have happened. No mention, at that point, of legacies from the Collateralised Debt Obligation (CDO) bombs of the Global Financial Crisis or spending of restricted funds.
Let’s not forget the attempts by Reynolds to close down Gosford City’s Protection of the Environment Trust with a one-man resolution at a meeting – no regard for trust law, the content of the deed or the unique role played by the trust.
The business community was delighted to see the back of the old regimes. Promises about the revitalisation of Gosford, mass development from Somersby to Warnervale and population growth outlined in the Central Coast 2036 Regional Plan and the new “negotiating power” of a large, regional council was going to get rivers of gold flowing in our direction.
The election and its aftermath
Pre-selection and the first election campaign were memorable affairs. Eaton courted Liberal preselection but ended up running as an independent. Best threw his hat in the ring as an independent and so did former Gosford Mayor and State Member, Chris Holstein. Doug Vincent and Lisa Matthews were also former Labor Wyong Councillors who had a tilt and former Liberal Gosford Councillor Chris Burke had a shot.
The election results clearly shocked the NSW Liberal-National Government and the local establishment: four Liberals – Pilon, Gale, Marquart, Burke; six Labor – Vincent, Hogan, MacGregor, Sundstrom, Mehrtens and Matthews; and five independents – Best, Greenaway, McLachlan, Smith and Holstein.
Both major parties had their wings clipped and, you could say, the independents held the balance of power. We got plenty of fresh blood with a few old heads to hold things steady. The voters are always right – right?
Rather than seize the opportunity to keep party politics out of local council and work together for the future of the region, several players, in and out of power, went rogue from day one. Those who did want to work together for the good of the region were, basically, on a hiding to nothing.
Two outcomes of the election set the scene for everything that has happened since September 2017. A source told me a new website and facebook presence was being developed in a local MP’s office. The source named the MP and said it was going to set the cat among the pigeons. The website and facebook page were to be called Tell Council. It has been a source of vitriol and abuse against most elected Councillors. Related pages, according to Facebook, include those of Central Coast Liberals and Taylor Martin MLC.
The second was a very nasty exchange between a former councillor and a sitting MP at the 2017 Central Coast Group Training Awards night at Mingara. I was the only witness close enough to hear what was being said. Not wanting to be involved, I walked away, but the language was colourful and appeared to be about Council pre-selection or lack thereof.
This was a private conversation I did not feel the need to record or report but I believe it explains the carnage that has played out in Council meetings ever since.
Gagged and gutted
This elected Council has been misrepresented, manipulated and sabotaged by those who want to see it fail – not because they don’t believe in the amalgamation, but because they didn’t get the power out of the amalgamation they expected.
A strict code of conduct was put in place during administration designed to make it difficult for elected Councillors to have a clear and thorough line of sight over how ratepayer funds were administered. Just as members of the public were required to email “ask council”, and stick virtual pins in maps on yourvoiceourcoast, if they wanted to make a contribution to decision making, our elected Councillors had to send emails to a generic address and wait months for a response. They were not allowed to approach any member of staff other than the CEO or a director. They could ask questions on notice and questions of the CEO and directors present at public meetings and they could sit on advisory committees but little else. They received regular staff briefings but not always with satisfactory outcomes, particularly around major projects such as a performing arts precinct for Gosford.
The professionals who make up the staff of Central Coast Council have obligations to tell those directors and our elected representatives the truth. They also have obligations to inform directors, the CEO and elected councillors of any probity issues, such as cashflow problems or misuse of developer contributions. Have they done so?
An audit and risk committee was put in place by the administrator and several places on that committee were taken up by external, highly-qualified appointees with a couple of Councillors also allowed to be members. Administrator Reynolds declared this committee would secure the highest possible standards of financial management and disclosure. It was another check and balance that our elected representatives should have been able to rely on. How did the committee not pick up on anomalous spending and over-spending?
Amalgamation costs a ticking time bomb
The true cost of sacking the old councils and merging them into Central Coast Council has never been clearly disclosed to the public or its elected representatives. Even before amalgamation, Noble told a Wyong Council meeting that the $20 million on offer from the NSW Government for amalgamation would not touch the sides. He said, on the record, at a public council meeting, that he believed the cost of amalgamation would be between $70 million and $120 million.
During the short stint of Brian Bell, former Lake Macquarie Council CEO, at Central Coast Council, he is understood to have estimated the true cost of amalgamation at around $150 million. Is that what Councillor Greg Best has been referring to regularly in Council meetings over the last 18 months as the massive “black hole”? If so, that expense is clearly the fault of the NSW Government but is being born by the ratepayers and blamed on their elected councillors.
This elected Council and its staff, created on the promise of superior bargaining power has had to beg for every cent and often been left high and dry for political reasons. The most recent example is that Council has had to cover the costs of the latest erosion works at Wamberal and The Entrance North even though the NSW Government’s favourite shop window mannequin, Lee Shearer, came to town to make everything right for the Liberal voters of the Wamberal waterfront.
Cost shifting from State to Local Government is a well-recorded and ongoing issue across NSW. It is having real consequences on the Coast and may be one of the main causes of current cashflow issues.
A year like no other
In the early hours of 1 January 2020 bush near the suburbs of Lake Haven and Blue Haven burned. Homes were lost and families left homeless. Central Coast Council did what it could. In February Tuggerah Lakes flooded, again Council helped. Then the COVID-19 global pandemic and subsequent economic disaster came along.
CEO Gary Murphy took decisive action by appointing insolvency experts to appraise the impact COVID-19 would have on the Council’s bottom line. He did so at the very beginning of the crisis, foreseeing the hit Council could take on fees, charges and rates. The operational plan got cut back, due dates for rates were changed and those in arrears were excused from paying penalties – all at a significant cost to Council’s bottom like. Local government employees were, as you may recall, excluded from JobKeeper. Council had to keep meeting its expenses, when many other employers received federal support, even with depleted revenue.
It now seems evident that the company consulted to deal with COVID-19 may have uncovered other issues and told the CEO he needed to act. Central Coast Council was one of four case studies examined by the NSW Audit Office to look at how Councils managed contributions paid by developers. Our Council came in for some criticism but most of what was revealed was old news, dating back to Gosford Council and its losses from investments in CDOs that went septic during the GFC. The amount was around $14 million and the CEO has since explained it has been paid back.
Developer contributions are restricted funds that cannot be used for anything other than the purpose they were collected for. It appears restricted funds were inappropriately used for administration purposes at the former Gosford Council and at Central Coast Council. It is understood relevant staff claim to have self-reported this problem. This is poor practice. It should not be allowed to happen and the financial experts on staff, paid for by our rates, should not allow this to happen. How and why did they?
The annual audit of Council’s books, overseen by the NSW Audit Office didn’t raise any alarms about any imminent fiscal cliff. That audit went via the experts on the audit and risk committee – again, no alarm bells. The preparation of the budget for this financial year also went through layers of checks and balances before it was signed off. All OK.
What to think of item 6.2?
The public deserves a clear timeline, from council staff, to explain exactly what has happened during the past two weeks. It appears that the notice of motion from Clrs Best, McLachlan, Marquart and Pilon was placed on the meeting agenda prior to CEO Murphy being made aware of recent developments. If that is the case, how did the councillors find out before the CEO? Did staff members leak this information to the councillors when they are legally required to disclose it to the CEO?
We are now told there is a major liquidity problem. Murphy has met with Councillors and investigations continue.
Reading between the lines it appears that the cash crisis could include recent expenditure of restricted funds. If that’s the case, who is responsible? What is the protocol for signing off expenditure within the ranks of the professional council? How does staff know which funds are restricted and what cash is available to spend on administration? Surely the system is clear and transparent. Is it reasonable to expect our “governors”, the board of directors – the elected councillors – to be able to have faith in their paid employees? If our councillors are bound by a code of conduct, surely staff are too?
Councillors have been asking these questions and more. These questions have been asked of the CEO and directors during public council meetings but have often walked away from briefings and audit and risk meeting frustrated at what they haven’t been told.
Why is this all coming out now as Council is about to appoint a permanent Chief Financial Officer who might have been able to right the ship?
Staff have prepared responses to each point in item 6.2 and they seem to make sense. In fact, they make it sound like a bit of a storm in a teacup. The consequences of the sudden cash crisis may be short lived once rates revenue extended from August to September is accounted for, the NSW Government stumps up for works at North Entrance and Wamberal and other ducks line up.
Can our councillors survive this?
Sorry folks, this feels like a stitch up. I hope I am wrong but I believe the current NSW Government and its representatives and agents on the Central Coast want our council sacked, again, and replaced with an administrator.
This would give them another 11-12 months to push through more mass development, clearing, planning policies, Crown Land divestments, unwanted intrusions into our bushland, monetisation and commercialisation of our natural assets, mining and gas exploration, drilling off our coastline, mass waste dumps at Somersby, over-population without infrastructure or jobs, without any oversight by elected representatives.
So what is it we need to tell council? They’ve had a rough ride and most of them have been through hell thanks to the toxic, out-of-control behaviour of the few. We are stuck with the Mike Baird amalgamation experiment. Instead of telling council, maybe we need to tell our local state MPs and MLCs, particularly those with ministerial titles, to fight for our local government and local area to have the funding it deserves. If the mega council the NSW Government created is struggling to pay its bills, come to the party and help. The only reasons not to help would be purely political. Sour grapes because we, the people, didn’t vote the way you wanted us to.
