Central Coast Council Administrator Rik Hart takes aim at the State Government

‘It’s like no one wants to know us’. Central Coast Council Administrator Rik Hart reveals the real hardships behind the scenes of the council crisis and takes aim at the State Government.

Central Coast Council cannot recruit and staff are leaving due to the ongoing threat of further cost cutting.

Administrator Rik Hart has revealed some raw behind the scenes truths of the financial crisis which saw council land $565m in debt.

On Wednesday, he publicly released a submission he has made into the Public Inquiry into the crisis, following “misinformation and inaccuracies” heard during the Inquiry’s recent public hearings.

“The misinformation out there is causing immense damage to this organisation,” Mr Hart said. “We are in a situation now where we have had ads for senior managerial roles, we have not had one response. We can’t recruit, people are leaving all because the threat is there that we are going to have to cut costs.”

In his submission, Mr Hart takes aim at the State Government saying when the crisis hit they underestimated the challenges council would face going down a “commercial lending path” with the banks.

Mr Hart released a timeline of events that happened since October 2020 when news of the crisis was announced.

“The timeline is to demonstrate what we went through,” he said.

“The reason why we have done timelines is not to get sympathy but to demonstrate the high degree of difficulty the organisation had to face when the government made the decision right at the beginning that this had to be sorted out by commercial solutions.

“We had to deal with not just the banks. We had to deal with IPART, the Office of Local Government … NSW Audit, politicians from all sides against what we were doing and a media and the community rightfully up in arms about what had happened. That was unprecedented.”

Mr Hart spoke about his third day at Central Coast Council late last year when he received word from a bank that they would withdraw a $107m loan portfolio. He said the State Government had not realised that by placing the organisation into receivership and changing the management, they were breaching the terms and conditions of the bank loan.

Exterior of Central Coast Council building (formerly Wyong Council) at Wyong. Picture by Mark Scott

“Just from that initial scenario the pressure was on,” he said.

He said council had to go to creditors to let them know they would not be paid.

“We got $6.4m from the State Government which allowed us to pay the staff. The weekly wage for that time was approximately $4m so there was not a lot leftover for creditors.”

He said after securing an initial $50m loan, the council put together a business package in December – outlining strategies such as sale assets and the proposed rate rise – to go to the four major banks for a $100m loan, with three out of four refusing to talk to them.

Prior to starting the role, Mr Hart said he was told by the State Government that councils were a “safe bet” for lending money.

“That proved to be totally incorrect,” he said.

In the final hours before the bank’s Christmas closure, the council required a letter of guarantee from the State Government for the $100m loan. Mr Hart said his calls to the Local Government Minister at the time had gone unanswered and he was “faced with the decision, ‘do I close the doors?’”

A last call to Planning Minister Rob Stokes finally resulted in the letter being sent.

“I just want you to think about the pressure an organisation is under throughout that period,” he said.

Planning Minister, Rob Stokes came to the rescue for council in December 2020. Picture: David Swift

He spoke about January and the ongoing meetings with unions and staff while the media and community was “attacking the hell out of us”.

“We had a lot of people that couldn’t take the pressure and they were ill. That’s why I am making the statements on this today so that the state government agencies need to think about working together and not leaving a large entity like this to a pack of wolves out there and hoping that they will survive,” he said.

“We have and it’s only because of the bloody determination that people like myself, the CFO and the new CEO David Farmer.”

Mr Hart spoke about the approved 15 per cent rate rise over the next three years and the fact that council is applying for it to be extended to ensure future revenue.

He said the Independent Pricing and Regulatory Tribunal (IPART) had told council “you are not supposed to come back for three years”.

“It staggers me, what part don’t they understand that our funding depends on us having a revenue stream. There is only one option for us down the track, we have to cut costs by a further $26m.”

He said he had told IPART he needed certainty and currently could not get an appointment with any State Government ministers to explain the situation.

“It’s like no one wants go know us,” he said. “We completed everything we said we were going to do by June 30. Everything the council was asked to do we have done, we have downsized, we have sold the assets, we have requested extra moneys from IPART on water and sewer and continuation on the current rate structure. We have done everything we can.”

He said the council was now trading profitably and needed to make sure the long term financial plan has the extra revenue secured.

Mr Hart said he needed the community on board when it came to extending the 15 per cent rate rise beyond three years.

“The organisation has done everything it can to get itself out of this situation. It has been fighting every bloody government agency, local politicians, the media and the community. And I can understand why people are angry, absolutely. But the difficulty is we have to look forward.”

He said his submission demonstrated what council has done since the crisis, how council has managed it, achievements and how the staff are feeling.

“It’s a pretty sad sorry organisation to be in, we can’t attract staff, we are losing staff. Until we get a break, everything is going to continue to go downhill.”

Mr Hart has made eight recommendations to the Public Inquiry Commissioner dealing with issues such as calling the next council election in October 2022 and regulations around infrastructure contributions. He has also called for 20 per cent of councillors, from any large council areas, to be appointed on qualifications and knowledge.