Central Coast Council financial crisis: Investigation into CEO called for

One of the biggest financial catastrophes in Australian local government history is set to cost hundreds of people their jobs and force up residents’ rates by as much as 15 per cent a year.

One of the biggest financial catastrophes in Australian local government history is set to cost 300 people their jobs and force up residents’ rates by as much as 15 per cent a year.

Central Coast Council administrator Dick Persson has also pinpointed who he claims is chiefly responsible for the $565 million debt disaster — sacked CEO Gary Murphy.

In his first public comments since taking sick leave when the crisis emerged, Mr Murphy told The Daily Telegraph he “made every effort to safeguard” the financial wellbeing of the council.

Gary Murphy outside his home on the Central Coast on Tuesday. Picture: John Grainger

Gary Murphy walking his dog on Tuesday. Picture: John Grainger

The  Telegraph can reveal suspended councillors want an investigation into why Mr Murphy was the only candidate put forward for the top job in 2018.

They also want a probe into his firing by Mr Persson, which triggered a $380,000 38-week severance payout.

And one sidelined councillor has made a formal complaint to the Independent Commission Against Corruption, saying staff tried to get approval for paying wages from restricted funds during a confidential meeting in the days before Mr Persson was brought in by the Berejiklian Government in October.

Mr Persson  revealed the council’s forecast operating loss of $115 million for this financial year and a forecast accumulated debt of $565 million over the past four years.

That  includes $200 million to be repaid to restricted reserves, which the administrator said  council had spent either unlawfully or had  “done without the approval of the elected body”. He wrote in his report Mr Murphy was “aware of this unlawful use of funds”.

Administrator Dick Persson. Picture: Adam Yip

Cr Greg Best. Picture: Mark Scott

Mr Persson confirmed the  staff cuts and proposed rate rise at  a meeting on Monday.

“In terms of reducing our loss for the next budget, we are in the process of taking out 300 people from the organisation,” he said.

“I lose more sleep over that one than I do over the rate increase. I can appreciate people will find it harder to lose $7 a week on average but it is a lot harder to lose your job.”

Mr Persson said  a rate rise was a last resort but was needed to secure the long-term financial viability of the council, saying the forecast projection of the 10 per cent rise was “very skinny”, however a 15 per cent rise would result in an additional $25 million next financial year. “Ratepayers will have a chance to comment on this.”

Several dismissed councillors    have now called for probes into how the  sacked CEO  was the only candidate to be put to the full council to be interviewed for the job.

  “The members of the public that I speak with are demanding such an investigation right now,” councillor Greg  Best said.

How Mr Murphy could get a $380,000 “golden handshake” after “running the ship up on the rocks” needed to be probed as well, Mr Best said.

Cr Bruce McLachlan. Picture: AAP/Sue Graham

The Central Coast Council administration building in Gosford.

Former peers supported Mr Best’s calls for a new probe into Mr Murphy’s recruitment and termination.

“I do believe the whole CEO selection process should be investigated as to why the others were not granted full interviews,” said sidelined independent Bruce McLachlan.

Ex Liberal councillor Rebecca Gale agreed with the need for an independent investigation into the termination payment.

Mr Best confirmed he  made the complaint to ICAC regarding his claim that staff tried to get approval for paying wages from restricted funds  before the administrator’s appointment. The request was refused.

In his report, Mr Persson laid much of the blame for the council’s  loss on Mr Murphy.  “The CEO is the ‘accountable officer’, with overall responsibility for financial management,” he wrote. “Required performance was not met.”

He alleged Mr Murphy deleted from the self-assessment in his performance review “the only two criteria that specifically dealt with meeting financial targets”.

Mr Murphy told The Telegraph: “I refute the claims made in the administrator’s report. I have written to Mr Persson to clarify the omissions and inaccuracies contained in his report.

“I am confident that a full and thorough examination of events from the creation of Central Coast Council in 2016 will show that I made every effort to safeguard the financial wellbeing of the council.”